Energy Conservation law

The Energy Conservation Act of 2001 (“The Act”) was created to promote energy efficiency and conservation, as well as matters related to and/or ancillary thereto. The modified Act regulates the use of energy by equipment, appliances, vehicles, vessels, industrial units, structures, or institutions that use, generate, transfer, or supply energy. With a special focus on the promotion of new and renewable energy and the National Green Hydrogen Mission, the amendment aspires to (i) support the realization of “Panchamrit”—the five key ingredients offered by India in COP-26 (Conference of Parties-26) in Glasgow 2021.

The modification is intended to assist India in meeting its commitments under COP-26. India pledged to (a) reach 500GW of non-fossil energy capacity by 2030; (b) fulfill 50% of its energy requirements from renewable energy by 2030; and (c) cut overall estimated Carbon emissions by one billion tonnes between COP-26 and 2030. (d) Reduce the economy’s carbon intensity by 45 percent by 2030 compared to 2005 levels, and (e) attain net zero emissions by 2070.

Key points from the Amendment act

• Carbon credit trading: The Amendment Act allows the Central Government to create a carbon credit trading mechanism. While neither the Principal Act nor the Amendment Act defines Carbon Credit, it is commonly understood to be a tradeable permit that allows the holder to emit a fixed amount of carbon dioxide or other greenhouse gases. The Central Government or any authorized agency may issue carbon credit certificates to registered enterprises complying with the carbon credit trading scheme. The term ‘registered entity’ is defined in the Amendment Act and refers to any entity, including designated consumers, that is registered under the carbon credit trading mechanism. The Carbon Credit Trading Scheme aims to reduce greenhouse gas emissions, thereby addressing climate change.
• Obligation to use non-fossil energy sources: The Amendment Act authorizes the Central Government to set a minimum share of non-fossil energy or feedstock consumption by designated users. varied types of non-fossil sources may be allocated a varied share of consumption for different users. Designated consumers include (i) industries such as mining, steel, cement, textile, chemicals, and petrochemicals, (ii) the transportation sector, including railways, and (iii) commercial buildings, as defined in the schedule.
• The Amendment Act replaces the definition of ‘energy conservation building codes’ with ‘energy conservation and sustainable building code’ to refer to the code that establishes norms and standards for energy efficiency and conservation, the use of renewable energy, and other green building requirements for a structure.
• Standards for vehicles and vessels: Before the Amendment Act, energy consumption rules could be set for equipment and appliances that used, created, communicated, or provided energy. The modified Act broadens the scope of Section 14 (Central Government’s power to regulate efficient use of energy and conservation) to include ‘vehicles’ (as defined in Section 2 (28) of the Motor Vehicles Act, 1988) and vessels (ships and boats).
• Penalty: The modified Act substitutes Section 26 of the Act. It imposes additional penalties and increases current punishments for violating specific Act provisions. For example, the Amendment Act increases the penalty for equipment and appliances that fail to meet the Central Government’s energy consumption guidelines, as well as equipment and appliances that lack the particulars required by the Regulations. In addition to the Act’s maximum penalty of ten lakh rupees, the Amendment Act imposes an extra penalty of at least two thousand rupees and up to five thousand rupees per appliance or equipment against which noncompliance occurred.
• Composition of the BEE governing council: The Act establishes the Bureau of Energy Efficiency. Before the Amendment, the Governing Council, which consisted of 20-26 members, was responsible for the general supervision, direction, and control of the Bureau’s business. The Amendment Act changes this to stipulate that the governing council shall comprise 31-37 members.

Significant amendments were made to the 2001 Act to help accomplish the COP-26 goals. The Amendment Act includes new concepts such as carbon pricing and requires specified customers to use non-fossil sources to achieve faster decarbonization and sustainable development goals. The Carbon Credit Trading Scheme has yet to be notified, but it may be done in the future. The Carbon Credit Trading Scheme’s scope and ambit are currently unclear. The same energy-saving method could earn a person a Renewable Energy Certificate, an Energy Saving Certificate, or a Carbon Credit Certificate. It remains to be seen whether the certificates will be made interchangeable in the future.

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