India to Launch Trading of Energy Efficient Certificates for Energy Intensive Industries

  • Published on November 8th, 2009

  • Trading could start as early as April 2010.
  • Would save 10,000 MW per year.
  • Aimed at reducing energy use by 7 to 8 percent.

In a bid to clarify its official stance and pressurize the developed countries ahead of the next month’s Copenhagen climate talks the Indian Prime Minister announced ambitious domestic mitigation measures while meeting with EU representatives in New Delhi. The measures include new and tougher efficiency standards for industries and incentives to encourage clean industrial practices.


The move is widely seen as a pressure tactic as India will oppose all demands for accepting mandatory emission reduction targets at the Copenhagen talks. With developed countries still struggling to come up with substantial measures, India’s announcement has added fire power to the developing countries stance.

Energy Efficiency Law

A new law regarding the energy usage levels of various industries will be tabled in the Indian Parliament during the winter session starting November 19. The law would include energy usage norms for companies spanning nine sectors including cement, steel manufacturing and power. the policymakers are busy working out the optimal energy usage levels for 714 energy-intensive companies.

The bill would emphasize more on energy efficiency than reducing carbon emissions. The industries would be required to meet the energy standards and those which fail to do so can buy energy efficiency certificates from the industries which have met the set standards. The certificates will be applicable for one year. The fundamental idea behind this plan is similar to that of the carbon trading. India is one of the biggest beneficiaries of the Clean Development Mechanism garnering millions of dollars for its clean energy projects, now it seeks to replicate the scheme nationally.

Energy Efficiency First, Emissions Later

The law would if successfully administrated would save about 10,000 MW energy every year, large enough to power Delhi and Mumbai, combined. Since India’s per capita carbon emissions are among the lowest in the world and the energy intensity of its industries is better than those of the developed countries carbon emissions India can afford to set aside the problem of carbon emissions for the moment. Instead it is looking to meet the rapidly growing energy demand as it looks to accelerate the economic growth and provide electricity to the poor.

The government also dodged the emissions reduction issue because it had faced severe criticism after a personal letter from the environment minister to the Prime Minister got leaked to the media. The letter contained minister’s suggestions about how the government should negotiate at the Copenhagen climate talks. The minister had written that India should accept international emission targets and should move away from the G77 group of nations and should look to project itself as a major strategic player.

The government was criticized by opposition parties as well as the scientists which explains the skipping of the emissions reduction issue. And since there is still no consensus on the issue of technology transfer and financial support from the developed countries India would not like to commit anything before the last leg of negotiations are completed. The bill would aim to improve the energy efficiency and save equivalent of 10 million tonnes of oil thus reducing carbon emissions.

Even though none of the incentives to be included in the proposed bill would be open to international scrutiny, it is safe to assume it is safe to assume that the government would certainly look to achieve the target it would set. India is running out of traditional energy resources like coal and natural gas and its carbon emissions are only going to increase with the rapid economic growth. So it is in India’s own interest that it works with complete commitment towards the domestic mitigation measures it adopts.

Image: Wikipedia

The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.

About the Author

currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.