“PAT Cycle-2: How Financial and Regulatory Incentives Can Drive Energy Efficiency”
India’s energy efficiency journey continued to gain momentum with the launch of Perform, Achieve, and Trade (PAT) Cycle-2 in 2016. This second cycle of the national-level energy efficiency program aimed to improve energy efficiency in 11 energy-intensive sectors, including three newly added sectors, namely DISCOMS, Railways, and Refineries. The program targeted an overall reduction of 12.13 million toe in energy consumption, with an estimated emission reduction of around 66.1 million tonnes of CO2.
The program’s regulatory framework provided designated consumers (DCs) with specific energy reduction targets, based on their baseline energy consumption, production levels, and other parameters. DCs who exceeded their targets were issued Energy Saving Certificates (ESCerts), which could be traded on the exchange. In contrast, non-compliance resulted in penalties.
PAT Cycle-2 covered a total of 621 DCs, with a combined baseline energy consumption of around 208 million toe. The DCs achieved energy savings of 14.08 million toe, exceeding the targeted energy savings of 12.13 million toe by 1.95 million toe. This resulted in a reduction of 66.1 million tons of CO2eq. DCs who exceeded their targets were issued 5.7 million ESCerts, which could be traded on the exchange. In total, 3.66 million ESCerts were purchased to fulfill the shortfall.
PAT Cycle-2’s success can be attributed to several factors, including the regulatory framework’s clear targets and deadlines, financial incentives provided by ESCerts, and the program’s monitoring and verification mechanisms, which ensured that DCs adhered to their targets and reported their energy consumption accurately.
The expected investment on energy-efficient projects and technologies under PAT cycle-2 was around INR 43,721 Cr, highlighting the significant investment potential of energy efficiency measures.
Overall, PAT Cycle-2 built upon the success of its predecessor, providing further evidence of the potential of financial and regulatory incentives in promoting energy efficiency. The program’s expansion to include new sectors demonstrated the Indian government’s commitment to sustainable energy consumption and the environment. Building on the success of PAT Cycle-2, India has launched subsequent cycles of the program, continually expanding its scope to include more sectors and DCs. Today, India’s energy efficiency journey serves as a shining example of how financial and regulatory incentives can drive meaningful change in the energy sector, leading to a more sustainable future.
key highlights from PAT Cycle-2:
Particulars Unit Value Total Number of DCs No’s 621 Baseline Energy Consumption in PAT-Cycle-II Million TOE 195.34 Energy reduction target Million TOE 12.13 Energy savings achieved in PAT-Cycle-II Million TOE 14.08 Energy Savings achieved in excess of target Million TOE 4.57 Reductions in GHG emissions in PAT Cycle-II Million Tons of CO2 eq. 66.1 ESCerts issued to overachievers Million EScerts 5.7 Purchase compliance of ESCerts for shortfall Million EScerts 3.66