The Energy Conservation (Amendment) Bill, 2022


    In Context

    • Recently, The Rajya Sabha passed the Energy Conservation (Amendment) Bill, 2022.
      •  The Bill seeks to amend the Energy Conservation Act, 2001.   

    More about the news

    • The Energy Conservation (Amendment) Bill mandates non-fossil sources of energy and establishes a domestic carbon market in India. 
      • The bill was also amended in 2010.
    • Key provisions of the Energy Conservation (Amendment) Bill:
      • The bill seeks to mandate the use of non-fossil sources, including Green hydrogen, green ammonia, biomass, and Ethanol for energy and feedstock; 
    • Establish Carbon Markets
    • Bring large residential buildings within the fold of the Energy Conservation regime; 
    • Enhance the scope of the Energy Conservation Building Code
    • Amend penalty provisions
    • Increase members in the governing council of the Bureau of Energy Efficiency (BEE)
    • Empower the State Electricity Regulatory Commissions  to make regulations for smooth discharge of its functions 
    • To put in place enabling provisions to make the use of clean energy, including green hydrogen, mandatory and to establish carbon markets.

    Details of the Bill

    • Carbon Credits:
      • Issuing credits:
        • According to Global Energy Monitor, the government will issue carbon credits to businesses or other institutions interested in the scheme. 
        • Industries could sell and buy credits to meet their carbon budget.
      • Selling Carbon Credits to other countries:
        • Carbon credits will not be sold to other countries. When we sell credits to other countries, we cannot add them to our NDCs. 
        • However, there is a provision to sell them to other countries when there is a surplus or a need to finance some cutting-edge technology.
    • Scope for Energy Conservation Building Code:
      • The amended bill aims to bring large residential buildings under the Energy Conservation regime which enhances the scope of the Energy Conservation Building Code.
      • Meaning of Energy Conservation Building Code:
        • According to the draft, “energy conservation building codes” means the norms and standards of energy consumption expressed per square metre of the area where energy is used. 
        • It also includes the location of the building.
    • Carbon Market:
      • The Bill empowers the central government to specify a carbon credit trading scheme.
      • The proposed amendments aims to encourage the development of a carbon market by laying the framework for issuance of carbon credits against deployment of clean technology
        • Investment in clean technology will help corporations in greening their business profiles and the attached carbon credits will provide an additional revenue stream. 
      • Hence, the proposed amendments seek to address a prominent gap in the climate change narrative with respect to involvement of the private sector.
    • Reducing the connected loads of states:
      • Bill aimed to bring large residential buildings, with a minimum connected load of 100 kilowatt (kW) or contract demand of 120 Kilovolt Ampere (kVA), within the fold of the Energy Conservation regime. 
      • States, if they wished, could bring down the connected load and contract demand.

    Carbon Credits

    • A carbon credit is a permit that allows the company that holds it to emit a certain amount of CO2 or other greenhouse gases.
    • One credit permits the emission of a mass equal to one tonne of carbon dioxide.
    • These were devised as a market-oriented mechanism to reduce greenhouse gas emissions.
    • Companies get a set number of credits, which decline over time. 
    • They can sell any excess to another company.


    • Ultra vires of the Energy Conservation Act, 2001:
      • While the Energy Conservation Act, of 2001 deals with saving energy, the present Bill deals with saving the environment and conserving climate change due to the usage of fossil and non-fossil fuels while generating electricity. 
      • The scope and objective of the principal Act do not take in the purpose and object of the present Bill. 
      • The Bill relates to monitoring and controlling of carbon emission and climate change which is an aspect of the environmental laws
    • Lack of coordinated approach:
      • There is the Central Government discharging one set of roles, there are the State Governments which have been authorised under the Act to discharge a different set of roles. 
      • What is missing is a coordinated approach between the Central Government and the State Government.
    • Inadequate opinion in BEE:
      • The Bill proposes only five representatives of the States and it means that a majority of the States would not be able to register their opinion in the Bureau of Energy Efficiency. 
    • Legal infirmities:
      • It is being criticised that the Bill has a lot of legal infirmities which required re-consideration and re-introduction.

    Way Ahead

    • India is currently marching towards its target of reducing its carbon intensity by 45 per cent by 2030. This goal is a part of India’s updated Nationally Determined Contributions (NDC).
    • India needs to align public financial flows with announced targets on energy transition, to leverage private finance. This includes 
      • Shifting subsidies to clean energy
      • Mandating SOE (state-owned enterprises) investments in clean energy and Increasing targets on public finance for clean energy. 

    Source: TH