Nitin Sethi | TNN
New Delhi: In its National Action Plan on Climate Change, the Centre has, among other things, decided to set up different energy efficiency targets for different sectors. It would be impractical to put one benchmark standard for all the units to achieve over a fixed period.
Say, the best sponge iron plant consumes only 5,000 litres of oil equivalent to produce one tonne of sponge iron but the worst uses 15,000 litres to produce the same one tonne. If the government was to put a fixed benchmark demanding that in two years’ time all sponge iron plants should be operating at 3,000 litres of oil equivalent per tonne or shut shop, the worst performers would be easily wiped off causing upheavals not only in the manufacturing sector but also retard economic growth as well as cause labour problems.
The government could instead resort to separate targets for different levels of players in each sector, suggest knowledgeable observers. So the most inefficient end of the spectrum would have a level of efficiency to achieve relative to their existing consumption levels and the highest end of the spectrum—the best in the business—would have a target to achieve relative to their existing consumption levels. These targets could be successfully revised upwards over fixed number of years. Those who achieve their targets and surpass these would be allowed to then trade in them with those who have not been able to meet their targets in an open market. Or, they could set off these extra savings over the next round of efficiency targets that the government notifies from time to time.
In other words, the heavy fuel consuming industries could start a trade in energy savings certificates. This would allow the overall target of sector wide efficiency to be achieved while ensuring that the achievement is made at the least cost to the industry and the economy because all improvements in efficiency are at the end of day driven by investments that the businesses can make. This is exactly the logic followed in the international arena in running the carbon credit trade. Rich countries have targets to cut their carbon dioxide emission. But for some it can be very expensive to achieve these targets in their own backyard. So they instead come to developing countries to buy credits generated by industries in countries like India that have achieved some carbon emission reduction.
But keeping with India’s international stance, the trade will be restricted only to a domestic market and not be linked to any international market in energy saving certificates or anything similar.
Say, the best sponge iron plant consumes only 5,000 litres of oil equivalent to produce one tonne of sponge iron but the worst uses 15,000 litres to produce the same one tonne. If the government was to put a fixed benchmark demanding that in two years’ time all sponge iron plants should be operating at 3,000 litres of oil equivalent per tonne or shut shop, the worst performers would be easily wiped off causing upheavals not only in the manufacturing sector but also retard economic growth as well as cause labour problems.
The government could instead resort to separate targets for different levels of players in each sector, suggest knowledgeable observers. So the most inefficient end of the spectrum would have a level of efficiency to achieve relative to their existing consumption levels and the highest end of the spectrum—the best in the business—would have a target to achieve relative to their existing consumption levels. These targets could be successfully revised upwards over fixed number of years. Those who achieve their targets and surpass these would be allowed to then trade in them with those who have not been able to meet their targets in an open market. Or, they could set off these extra savings over the next round of efficiency targets that the government notifies from time to time.
In other words, the heavy fuel consuming industries could start a trade in energy savings certificates. This would allow the overall target of sector wide efficiency to be achieved while ensuring that the achievement is made at the least cost to the industry and the economy because all improvements in efficiency are at the end of day driven by investments that the businesses can make. This is exactly the logic followed in the international arena in running the carbon credit trade. Rich countries have targets to cut their carbon dioxide emission. But for some it can be very expensive to achieve these targets in their own backyard. So they instead come to developing countries to buy credits generated by industries in countries like India that have achieved some carbon emission reduction.
But keeping with India’s international stance, the trade will be restricted only to a domestic market and not be linked to any international market in energy saving certificates or anything similar.
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