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Business News/ Politics / Policy/  Lok Sabha clears amendments to EC Act
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Lok Sabha clears amendments to EC Act

The Energy Conservation (Amendment) Bill, 2022, seeks to mandate use of non-fossil sources, including biomass and ethanol for energy and feedstock along with the use of green hydrogen and green ammonia

The push for stringent norms for energy conservation, use of renewable energy and boosting carbon credit market in the country comes on the backdrop of prime minister Narendra Modi’s commitment at COP26 summit in Glasgow last November to achieve carbon neutrality by 2070.Premium
The push for stringent norms for energy conservation, use of renewable energy and boosting carbon credit market in the country comes on the backdrop of prime minister Narendra Modi’s commitment at COP26 summit in Glasgow last November to achieve carbon neutrality by 2070.

NEW DELHI : The Lok Sabha on Monday cleared the amendments to the Energy Conservation Act aimed at putting in place provisions to make the use of clean energy mandatory and paving the way for the setting of carbon markets in the country.

The Energy Conservation (Amendment) Bill, 2022 seeks to mandate the use of non-fossil sources, including biomass and ethanol, for energy and feedstock, along with the use of green hydrogen and green ammonia.

It also proposes to enhance the scope of the Energy Conservation Building Code and bring large residential buildings within the ambit of the energy conservation regime.

The Energy Conservation Act of 2001 was last amended in 2010 to address various new factors that emerged with the energy market’s development over time and to provide for more efficient and effective use of energy and its conservation.

In its statement of objects and reasons for the amendments to the Act, the power ministry said that with time, and in the context of the energy transition with a special focus on the promotion of new and renewable energy and the National Green Hydrogen Mission, a need has arisen to further amend the said Act to facilitate climate targets committed at COP26 summit, promote renewable energy and development of domestic carbon market to battle climate change and mandate use of non-fossil sources to ensure faster decarbonization of Indian economy and help in achieving sustainable development goals in line with the Paris Agreement.

“It is considered necessary to have legal provisions to prescribe minimum consumption of non-fossil energy sources as energy or feedstock by the designated consumers. This will help in the reduction of fossil fuel-based energy consumption and resultant carbon emissions to the atmosphere," it said.

Similarly, a need is also felt to provide a legal framework for a carbon market with the objective of incentivizing actions for emission reduction leading to increased investments in clean energy and energy efficiency areas by the private sector, said that statement.

In the endeavour to empower the state electricity regulatory commissions, the bill would allow the state commissions to make regulations regarding making applications to the commission and the fees payable.

The bill would also empower state governments to make rules regarding fees to be levied for the services rendered by the designated agency for promoting the efficient use of energy and its conservation, along with the preparation of the budget of the designated agency.

Under the regulatory framework for carbon credit trading, the union government or any agency authorized by it may issue a carbon credit certificate to the registered entity which complies with the requirements of the carbon credit trading scheme. The registered entity shall be entitled to purchase or sell the carbon credit certificate in accordance with the carbon credit trading scheme.

A recent report by Kotak Institutional Equities said that the proposed roll-out of carbon markets in India is in line with global trends, where countries

across the globe have committed to net-zero targets and are implementing explicit carbon pricing as one of the key strategies to achieve them.

“Globally, 68 carbon pricing instruments (CPIs), covering 23% of the GHG emission, are operational. The roll-out in India is expected to happen in three phases, leveraging the existing infrastructure and building on the learning from the Perform Achieve and Trade (PAT) scheme and the global experience in this sphere," it said.

The initial two phases will see the roll-out of the voluntary market, which will build the national capacity in carbon markets, a prerequisite for successfully establishing a compulsory carbon market in the last phase, the Kotak report said.

Along with the proposal to increase members in the governing council of the Bureau of Energy Efficiency, the bill also seeks to empower the bureau to make regulations regarding the agency which may be authorized to carry out the functions of the bureau and the technical qualification to test samples.

The bill further said that state governments should constitute a fund to be called the ‘State Energy Conservation Fund’ for promoting the efficient use of energy and its conservation within the state.

The push for stringent norms for energy conservation, use of renewable energy and boosting the carbon credit market in the country comes on the backdrop of prime minister Narendra Modi’s commitment at the COP26 summit in Glasgow last November to achieve carbon neutrality by 2070.

The bill will now have to be passed by Rajya Sabha and then will require the President’s assent to become a law. Now that the parliament has been adjourned sine die four days ahead of schedule, the bill will be taken in the Rajya Sabha in the winter session.

 

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Published: 08 Aug 2022, 07:33 PM IST
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