Prime Minister of India - Dr. Manmohan Singh

PM approves National Mission on Enhanced Energy Efficiency

The Prime Minister's Council on Climate Change today approved "in principle" the National Mission on Enhanced Energy Efficiency. Approving the Mission, the Prime Minister said that, "This Mission will enable about Rs. 75,000 crores worth of transactions in energy efficiency. In doing so, it will, by 2015, help save about 5% of our annual energy consumption, and nearly 100 million tonnes of carbon dioxide every year".

The Mission is the second of the eight missions under India's National Action Plan on Climate Change to be approved by the Council. The National Solar Mission was approved earlier this month.

In his opening remarks, the Prime Minister said "our success in reducing the energy intensity of our growth will also reduce the carbon intensity of our growth. This will have a beneficial impact on our emissions trajectory. The implementation of this mission will also be a powerful signal to the international community that we are willing to contribute in a significant manner, to meeting the global challenge of climate change." The Prime Minister also emphasized "it must also have inbuilt provisions for monitoring and evaluation so as to ensure transparency, accountability and responsiveness."

The most innovative and challenging new initiative to be introduced under the Mission is the "Perform, Achieve and Trade" (PAT) mechanism which would assign energy efficiency improvement targets to the country's most energy-intensive industrial units, with the provision of allowing them to retain any energy-efficiency improvements in excess of their target in the form of Energy Savings Certificates, called ESCerts. Units will also be allowed to use purchased ESCerts to meet their targets.

Other Mission initiatives include expanded use of the carbon market to help achieve market transformation towards more energy-efficient equipment and appliances, and the creation of two funds to help channel investment into energy-efficiency projects. One of the funds, the Partial Risk Guaranty Facility, will provide back-to-back guarantees to banks for loans to energy-efficiency projects so as to reduce the perceived risks of these projects. The other fund, a Venture Capital Fund, would support investment in the manufacturing of energy-efficient products and provision of energy-efficiency services.

Another major goal of the Mission is the promotion of Energy Service Company (ESCO) based upgrades to energy efficiency in buildings, municipalities and agricultural pumpsets. Through this business model, ESCOs invest in energy-efficiency investments, and are paid over several years from the resulting energy savings. The Power Minister, Mr. Sushilkumar Shinde said "we have already initiated a pilot ESCO project in the agricultural sector in Solapur district in Maharashtra," (The Power Ministry is coordinating this Mission.) He said that the, energy savings from the replacement of inefficient pumpsets by BEE 5-star labeled pumpsets would not only pay the ESCO for the investment in pumpsets, but will also reduce the subsidy bill of the state government. And once successful, the scheme has potential to be replicated across the country.

The Council also approved the selection of the Bureau of Energy Efficiency (BEE) as the Mission implementing agency, and of a new corporate entity, Energy Efficiency Services Ltd., to carry out the market-related actions of the Mission. BEE would be strengthened to support Mission implementation. It is estimated that the budgetary support for Mission implementation, including seed capital for the two funds, would be Rs. 295 crores in the current Plan period.

In his closing remarks , the Prime Minister agreed with the Council member's suggestions that the Mission document should be made "reader-friendly". It was stressed by many Council members that the Mission would succeed only to the extent it became a "peoples movement."