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Changes proposed to EC Act: Incentivising clean energy use, mandatory level of renewables

The proposed amendments are also expected to create a carbon market in the country and promote the consumption of renewable energy either directly or from the power grid.

By: ENS Economic Bureau | New Delhi |
October 31, 2021 3:30:40 am
The proposed amendments to the Energy Conservation Act, 2001, (EC Act) are also expected to create a carbon market in the country and promote the consumption of renewable energy (File)

The power Ministry has proposed amendments to the Energy Conservation Act, 2001, (EC Act) which are set to specify a minimum share of renewable energy in overall consumption by industrial units. The amendments are also set to incentivise the use of clean energy through carbon saving certificates and the issuance of carbon credits for the use of clean technologies.

“The proposal includes defining a minimum share of renewable energy in the overall consumption by the industrial units or any establishment. There will be provision to incentivise efforts on using clean energy sources by means of carbon saving certificate,” the ministry said in a release issued on Saturday. The proposed amendments have been discussed with key stakeholders in multiple consultations according to the government.

The Centre recently notified rules aimed at preventing power distribution companies from backing out of power supply from renewable energy generators by classifying the latter as ‘must-run’ plants from which power supply cannot be curtailed except in cases of technical constraints or risks to the security of the power grid.

The proposed amendments are also expected to create a carbon market in the country and promote the consumption of renewable energy either directly or from the power grid.

Carbon markets in other jurisdictions, such as the EU Emissions Trading System, set an absolute cap on the total emissions by selected entities per year. Entities that keep their emissions below prescribed levels are permitted to sell emissions allowances to entities that have not been able to meet emissions limits.

India does, however, have an Energy Savings Certificates (ESCert) trading market which implicitly covers carbon emissions in which designated consumers that overachieve their targets of reducing power consumption are allowed to sell energy certificates to other designated consumers on an exchange.

India aims to reduce the emissions intensity of the economy by 33-35 per cent in 2030 against the levels of 2005, and achieve 40 per cent of non-fossil fuel based installed power capacity by 2030.

Carbon Market

The proposed amendments to the Energy Conservation Act, 2001, (EC Act) are also expected to create a carbon market in the country and promote the consumption of renewable energy

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