India Inc to get many incentives to save energy

New Delhi: The government is setting up a risk guarantee facility and a venture capital fund to improve energy efficiency in India as part of the National Mission on Enhanced Energy Efficiency approved by the Prime Minister's Council on Climate Change here Monday.

A new "Perform, Achieve and Trade" (PAT) mechanism which will assign energy efficiency improvement targets to the country's most energy-intensive industrial units is being set up under the mission. Under a provision, they will be allowed to retain any energy-efficiency improvements in excess of their target in the form of Energy Savings Certificates, called ESCerts. Units will also be allowed to use purchased ESCerts to meet their targets.

Other mission initiatives include expanded use of the carbon market to help achieve market transformation towards more energy-efficient equipment and appliances, and the creation of two funds to help channel investment into energy-efficiency projects.

One of the funds, the Partial Risk Guaranty Facility, will provide back-to-back guarantees to banks for loans to energy-efficiency projects so as to reduce the perceived risks of these projects. The other fund, a Venture Capital Fund, will support investment in the manufacturing of energy-efficient products and provision of energy-efficiency services.

Another major goal of the Mission is the promotion of Energy Service Company (ESCO) based upgrades to energy efficiency in buildings, municipalities and agricultural pumps. ESCOs will invest in energy-efficiency investments, and will be paid over several years from the resulting energy savings.

Prime Minister Manmohan Singh said: "This mission will enable about Rs.75,000 crore worth of transactions in energy efficiency. In doing so, it will, by 2015, help save about about five percent of our annual energy consumption, and nearly 100 million tonnes of carbon dioxide every year."

The mission is the second of the eight missions under India's National Action Plan on Climate Change to be approved by the council. The National Solar Mission was approved earlier this month.

Manmohan Singh pointed out: "Our success in reducing the energy intensity of our growth will also reduce the carbon intensity of our growth. This will have a beneficial impact on our emissions trajectory. The implementation of this mission will also be a powerful signal to the international community that we are willing to contribute in a significant manner, to meeting the global challenge of climate change."

The prime minister emphasized that the mission must have "inbuilt provisions for monitoring and evaluation so as to ensure transparency, accountability and responsiveness".

The council also approved the selection of BEE as the mission implementing agency, and of a new corporate entity, Energy Efficiency Services Ltd., to carry out market-related actions of the mission. BEE will be strengthened to support mission implementation.