In a bid to meet India’s commitment to exceed its Paris agreement climate targets, the Union Minister of Power recently introduced the Energy Conservation (Amendment) Bill 2022 in Rajya Sabha.



The Bill proposes to amend the Electricity Conservation Act 2001 (last amended in 2010), to introduce changes such as incentivising the use of clean energy by issuing carbon saving certificates.


About the Energy Conservation Act, 2001

  • It empowers the Centre to specify norms and standards of energy efficiency for appliances, industrial equipment and buildings.
  • It established the Bureau of Energy Efficiency (BEE) and the 2010 amendment extended the tenure of the Director General of the BEE from 3 to 5 years.
  • According to the Act, the Centre can issue energy savings certificates to those industries which consume less than allotted energy and can be sold to those who consume more – providing for a framework for energy trading.
  • The Act allows the Centre to prohibit the manufacture, sale, purchase or import of any particular equipment unless it conforms to specified norms.
  • In case of any violations, each offence shall attract a penalty of Rs 10 lakh. Consumers will be penalised according to their excess consumption.
  • Any appeals against any such order will be heard by the appellate tribunal established under the Electricity Act, 2003.


The Energy Conservation (Amendment) Bill 2022

  • Changes proposed —
      • Defining the minimum share of renewable energy to be consumed by industrial units or any establishment.
      • Issuing carbon saving certificates to incentivise efforts to use clean energy.
      • Strengthening institutions such as the BEE. For example, the bill amends the composition of the governing council of BEE.
      • Facilitating the promotion of green Hydrogen as an alternative to the fossil fuels used by industries.
      • To specify a carbon credit trading scheme for the use of clean energy to lure the private sector to climate action.
      • Carbon credit implies a tradeable permit to produce a specified amount of carbon dioxide or other greenhouse emissions.
      • New energy conservation code for buildings — For example, including larger residential buildings under energy conservation standards, instead of only large industries and their buildings under the old code.
  • Main objective of these proposed amendments —
      • To increase Indias demand for renewable energy, thereby reducing the nation’s carbon emissions and hence address climate change.
      • To develop India’s Carbon market and boost the adoption of clean technology.
      • To meet its Nationally Determined Contributions (NDCs), as mentioned in the Paris Climate Agreement, before its 2030 target date.
  • Key issues —
      • Carbon credit trading aims to reduce carbon emissions. The question is whether the Ministry of Power or the Ministry of Environment is the appropriate Ministry to regulate this scheme.
      • The same activity may be qualified for renewable energy, energy savings and carbon credit certificates. The bill makes no mention of whether these certificates will be interchangeable.
      • Certain non-fossil energy use obligations must be met by designated users. Consumers may not have a choice in the energy mix due to the limited competition among distribution companies in any area.