New Energy Conservation Act to set in motion carbon control norms

With the passing of the Energy Conservation (Amendment) Bill, 2022 to be made as an Act in both houses of the Parliament, India is all set to speed up its carbon emission control plans and bring in radical changes in energy conservation.

Primarily, the bill empowers the central government to make a carbon credit trading mechanism and mandate companies and establishments to earmark a portion of their energy needs from non-fossil sources. The bill will also pave way for mandating energy consumption standards for vehicles and an Energy Conservation Code for large buildings with a connected load of 100 kilowatt or above.

The Energy Conservation Act, 2001 had certain provisions on consumption and promoting energy efficiency and energy conservation under the Bureau of Energy Efficiency to recommend regulations and standards for energy consumption. The bill was brought in to meet the commitments India made at the COP-26 summit in 2021 - for reducing total projected carbon emissions by one billion tonnes by 2030, reducing the carbon intensity of the economy by 45% by 2030, to have 500 GW of non-fossil energy capacity and meet 50% of its energy requirements from renewable energy by 2030.

The Act now empowers the central government to specify a carbon credit trading scheme or any authorised agency may issue carbon credit certificates to entities registered and compliant with the scheme, who can trade the certificates. 

The bill has provisions to mandate industries such as mining, steel, cement, textile, chemicals, petrochemicals, transport sector including railways and commercial buildings, as specified in the schedule, to meet a minimum share of energy consumption from non-fossil sources. Failure to meet this obligation will be punishable with a penalty of up to ₹10 lakh and attract an additional penalty of up to twice the price of oil equivalent of energy consumed above the prescribed norm.

The 'Energy Conservation and Sustainable Building Code' in the bill mandates norms for green commercial buildings. The energy conservation code applies to commercial buildings erected after the notification of the Code, and having a minimum connected load of 100 kilowatt (kW) or contract load of 120 kilo volt ampere (kVA). The Code will also apply to the office and residential buildings meeting the above criteria, but allows state governments to lower the load thresholds.

The Bill also brings vehicles and vessels (ships and boats) under the ambit of energy consumption standards. Vehicle manufacturers in violation of fuel consumption norms will be liable to pay a penalty of up to ₹50,000 per unit of vehicles sold. The Act will also pave for setting up of the Bureau of Energy Efficiency (BEE), with a governing council of 20 and 26 members.