About 4.5 million air-conditioners are sold in India every year.
The move follows a series of steps under the national climate change plan including promotion of energy-efficient LED bulbs and solar-powered agriculture pumps as well as raising taxes on production of coal and on auto fuel.
The government is committed to reducing the emissions intensity of India’s gross domestic product (GDP) by 33-35% by 2030 from 2005 levels.
All air-conditioners will need energy-saving and intelligent regulation of compressors in place of the conventional thermostat-triggered cut-offs, said the Bureau of Energy Efficiency (BEE), the standard setter for appliances. This is also effective from January 2018.
Using a smart compressor regulator will help save about 250 kilowatt/hour of electricity consumption in a year by a 1.5 tonne air-conditioner, which is currently rated as the most efficient (five star), explained Sanjay Seth, secretary and energy economist at BEE.
“This translates into a saving of ₹ 1,500 a year, taking the power tariff at ₹ 6 per kilowatt/hour. Today, ACs with this technology are costlier by about ₹ 7,000-8,000 a unit. But as more units adopt it, cost will come down," said Seth.
Air-conditioner maker Voltas Ltd said the company would comply with the new standards.
“We would like to reiterate that we are ready to comply with the new guidelines set by BEE for 2018. We will continue to provide energy-efficient products to our customers," said Pradeep Bakshi, president and chief operating officer, Voltas.
Mohammed Hussain, business head, air conditioning group, Panasonic India, said that inverter ACs—those with smart compressor regulators—have raised the bar for the energy efficiency of air conditioners in India and labelling will further improve it.
“The future looks bright and soon air-conditioners will not be a big strain on electricity bills."
The new rating was voluntary for the brands but will become mandatory from January 2018, explained Hussain, adding that vendors will be stocking old inventory till the end of 2017. “Effectively, the flushing out of the inventories will be till March 2018. Hence, the impact will be seen from April 2018," he said.
Other air-conditioner makers, Samsung Electronics Co. Ltd and LG Electronics Inc., did not respond to Mint’s queries.
As inefficient products go out of the market, BEE, which reports to the Union power ministry, revises the rating of the efficient ones downward to encourage more innovation. Accordingly, a five-star rated unit under the current rating system will be reclassified as a three-star one from January 2018, said Seth.
Energy economist Saurabh Diddi of BEE said that intelligent compressor regulators will help a unit to cut 200kg of carbon emission a year.
The new star rating system—Indian Seasonal Energy Efficiency Ratio—will test the performance of air-conditioners at temperatures of 24-43 degrees Celsius based on Indian weather data, as against the current system of using a flat 35 degree benchmark.
BEE is working on adding LED bulbs, geysers and cars to the list of items requiring compulsory star rating.
India’s climate change combat strategy hinges on having more renewable sources of energy (175 gigawatt, or GW, by 2022, up from 6.7GW now) and improving energy efficiency.
The government wants about two-fifth of India’s electricity to be generated from non-fossil fuels and create additional forest cover capable of absorbing an extra three billion tonnes of carbon dioxide by 2030.
The emissions reduction drive through labelling and standards as well as the use of taxes on fossil fuels in the battle against climate change are effective, said Anish De, partner and head of the oil and gas practice at KPMG in India.
But market-based frameworks such as renewable energy certificate (REC) trading or the Perform, Achieve and Trade (PAT) scheme to promote energy efficiency require to be fine-tuned, De said.
Under the REC framework, entities such as power distribution companies can meet their renewable purchase obligation by buying RECs from clean energy producers, offering the latter a source of revenue. Under PAT, industries that fail to achieve mandated energy efficiency targets have to pay penalty.
“Taxation of fossil fuels is one tool that is seen to be effective and easy to administer, while mechanisms like REC require to be fine-tuned from time to time," said De.
Finance minister Arun Jaitley doubled the clean energy cess on coal production to ₹ 400 a tonne in the 2016-17 budget and raised excise duty on petrol and diesel several times since November 2014, taking advantage of falling global oil prices. In 2015-16, the government raised ₹ 1.5 trillion by way of excise duty on petrol and diesel, more than double what these two products contributed in the previous year.