Indian Railways to come under the Energy Efficiency norms of BEE

The scheme is unique in many ways, particularly from a developing-country’s perspective since it creates a market for energy efficiency through tradable ESCerts

For the first time in its history, India may see some energy efficiency norms for its Railway sector and possibly aviation too.

The Bureau of Energy Efficiency (BEE) is mulling options to include both railways and aviation, along with a few other large energy-intensive industries, in its second cycle of “Perform, Achieve and Trade’ (PAT) scheme set to begin from 2015 onwards. A final decision on whether both aviation and railways would be a part of the scheme would be taken by the beginning of the next financial year.

PAT, launched under the National Mission for Enhanced Energy Efficiency which is one of the eight missions under the National Action Plan on Climate Change (NAPCC), has set separate energy efficiency targets for various industries. Those fail to meet this will have to face the penalty. The first cycle which started in 2012 will end in March 2015.

It includes energy intensive sectors which accounts to about 40% of the country’s primary energy consumption — like thermal power, aluminium, cement, fertilizer, iron and steel, pulp and paper, textiles and chlor-alkali. When asked about the second cycle, BEE Director General Ajay Mathur said, “We are looking to add sectors like airlines, railways, roads, bus companies, petrochemicals, refineries, sugar and electricity transmission companies for the second cycle beginning in 2015. Selection will depend on criteria like total energy use, and easiness to measurement.”

According to BEE, private airlines would also be a part of this, if aviation sector gets included. “As far as energy efficiency is concerned there are no rules in India for aviation is concerned. By the beginning of the next financial year, we will finalise on what are the sectors that we would have to expand,” Mathur added.

“The Ministry of Power should consider adding civil aviation to the list of 8 focus sectors under the PAT scheme. The Energy Savings Certificates (ESCerts) would help shore up the bottomline of the industry players which is currently under deep financial distress,” Amber Dubey, Partner and Head-Aerospace and Defense at global consultancy KPMG, said.

The scheme is unique in many ways, particularly from a developing-country’s perspective since it creates a market for energy efficiency through tradable ESCerts. These certificates can be issued by any of the 478 industries in the first cycle, who are able to exceed their respective notified target. These industries can trade the ESCerts at Indian Energy Exchange and Power Exchange India at market price.

The norms would be vital for aviation sector because based on fuel data consumption collected directly from the seven Indian scheduled passenger airlines and one cargo airline, the carbon footprint of Indian scheduled airlines to/from domestic destinations was 6,755,000 tonnes of CO2. In the first cycle, the designated consumers account of 478 units to about 165 million tonnes oil equivalent of energy consumption annually.

“This would make most of these sectors energy efficient because the current norms have penalties attached to it. It is calculated on the basis on the achieved target and cost of energy. We will be finalizing the penalties for current units six months after the term ends on March 2015,” Mathur added.