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PAT (Perform, Achieve and Trade) Scheme for Energy Efficiency

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The Bureau of Energy Efficiency, working under the auspices of Ministry of Power, Government of India has recently launched a scheme for regulating energy consumption by companies and incentivising reduction in energy consumption. This scheme, known as the Perform, Achieve and Trade Scheme (“PAT Scheme“) is an important initiative undertaken by the Indian Government under the National Mission for Enhanced Energy Efficiency programme, which is a key component of the National Action Plan on Climate Change.

On 30 March 2012, the Central Government has notified the energy reduction targets for 478 industries in eight sectors, namely thermal power, aluminium, cement, fertilizer, iron and steel, pulp and paper, textiles and chlor-alkali. These targets are to be achieve by the relevant industries within a period of three years i.e. till 2014-15. If a company is unable to meet the energy reduction targets specified, it can either pay the prescribed penalty (which is dependent upon the units by which it has failed to meet its target) or purchase energy saving certificates which will be issued under the PAT scheme. Under the PAT scheme, industries which have saved more energy than their targeted requirement will be issued energy saving certificates for such additional units of energy saved. These certificates may then be traded on the two power exchanges, namely, Indian Energy Exchange and Power Exchange India. The assessment of the energy consumption of companies will be done by third party auditors, who will submit their verification report to Energy Efficiency Services Limited, a company promoted by the Ministry of Power for implementing energy efficiency schemes in India.

Shivani Chugh

shivani.chugh@pxvlaw.com

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