Energy Conservation Bill Amendments To Help Usher in Energy Transition: ICRA


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ICRA Research has said that the major amendments in the Energy Conservation Bill, passed in the Lok Sabha recently is a positive step in the right direction. The bill has set a minimum usage clause for non-fossil fuel in certain sectors with high emissions. On the other hand, to ensure faster decarbonisation of the Indian economy and help achieve sustainable development goals, carbon trading has been introduced in the amendment. The Bill specifies the details regarding issuing authority, entitlement, and trading details for carbon credits. With India being the 4th largest emitter of CO2 in the world, carbon trading can open up opportunities, the ratings agency said in a note.


Many states are making significant efforts to adopt the Energy Conservation Building Code and are front-runners in energy saving in commercial and public buildings. The scope of the Bill has been expanded to include residential buildings, which account for 4% of CO2 emissions. The Bill also expands the scope to include vehicles (as defined under the Motor Vehicles Act, 1988) and vessels (which include ships and boats).

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Commenting further, Mr. Rohit Ahuja, Head of Research and Outreach, ICRA, said, “Heavy penalties and widening the scope of the types of vehicles and buildings covered would help restrict carbon emissions. The Bill has also increased the manpower of the governing council and empowered the State Electricity Regulatory Commissions (SERC)s for better control over energy transition goals. Overall, the amendment is a step in the right direction but execution of the same and quantifying the results
to meet the climate goal vision will be a key monitorable.”

The Energy Conservation Act of 2001 provides for regulations for the efficient use of energy and its conservation. It lays forward regulatory, operational, legal, and financial obligations for energy-consuming equipment, appliances, buildings, and industries that will help India achieve its climate goals. To abide by India’s commitment, a policy push mandating the use of non-fossil fuels is critical, especially for high emission sectors such as power, transport, industries, and real estate (housing and commercial). The Energy Conservation Act Amendments are a step forward to reform the energy sector and usher in a climatefriendly energy transition.

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