Transcript Market based mechanism

MARKET BASED
MECHANISM
Perform, Achieve and Trade
A.K.ASTHANA
Sr. Technical Expert, GIZ, India
Gt
World CO2 Emission Savings
45
Current Policies
Scenario
40
42.6 Gt
New Policies
Scenario
35
7.1 Gt
35.4 Gt
30
13.7 Gt
Share of cumulative abatement
between 2010-2035
Efficiency
Renewables
Biofuels
Nuclear
CCS
50%
18%
4%
9%
20%
25
450 Scenario
20
2008
2015
2020
2025
2030
21.7 Gt
2035
Source: WEO 2010
New Policies Scenario is the central scenario in WEO-2010
>
assumes cautious implementation of recently announced commitments & plans, even if yet to be
formally adopted
The 450 Scenario sets out an energy pathway consistent with the goal of limiting increase in average
temperature to 2OC
India – CO2 Emission Reduction
Share of cumulative abatement
between 2010-2035
Efficiency
Renewables
Biofuels
Nuclear
CCS
51%
32%
1%
8%
8%
Energy Profile - India
GHG Emissions Across Sectors
Energy Intensity - Industrial Sector
3.3
190
185
3.25
180
175
3.2
170
3.15
165
160
3.1
155
150
3.05
145
3
140
2004-05
2005-06
2006-07
2007-08
2008-09
Energy Intensity of industry sector (mtoe per Billion Rs. GDP)
Commercial energy consumption in Industry (in mtoe)
PAT Scheme Goals and action points
Accelerating the shift to
energy efficient appliances
in designated sectors
through innovative
measures to make the
products more affordable.
Creation of mechanisms
that would help finance
demand side management
programs in all sectors by
capturing future energy
savings.
Specific Energy
Consumption (SEC)
reduction targets for the
478 energy-intensive units
which are designated
consumers under the
Energy Conservation Act
Developing fiscal
instruments to promote
energy efficiency
Perform, Achieve & Trade (PAT) Mechanism
• The market based mechanism to enhance the cost effectiveness in improving the Energy Efficiency
in Energy Intensive industries through certification of energy saving which can be traded
Market Based Mechanism
Processes Involved
Stakeholders
Reward over
achiever
Designated
Consumers
Administrator
• Set target and
compliance period
Penalize under
performer
• 8 sectors Thermal
Power Plant, Steel,
Cement, Fertilizer,
Pulp & Paper,
Textile, Aluminium,
Chlor-alkali
Set Targets
•Setting targets on the basis of
current specific energy
consumption
•Set compliance period
•May take into account Location,
Vintage, Technology, raw
materials, product mix etc.
Auditing Agencies
Market Place
• Independent
• Monitor, verify and
certify
• Transaction of
energy efficiency
instrument
Monitoring & verification of
targets by Designated Energy
Auditors (DENA)
•Check if designated consumer
has achieved targets
•Underachievement: Obligations
to buy ESCerts or pay penalty
•Overachievement: Issuance of
ESCerts for banking for later use
or trade
Trading of ESCerts
•Participation by Designated
consumers on platform provided
by Power Exchanges
•Symmetrical flow of information
Concept of Target, Compliance, Escerts &
Penalty
Issued Escerts
Penalty
Baseline
SEC
Target
Achieved SEC
Compliance
Target
SEC
Purchase
Escerts
Scenario 1
Scenario 2
PAT Activity Flow Sheet
Getting Information
Through Base Line
Format
Data Compilation/
Evaluation
Target Setting
[Declaration of Base
Year, Target Year ]
Baseline & Target Setting (based on last three years)
(Annual
submission
but the
target
compliance
for three
years)
Communication to
BEE and SDA
Preparation
Performance
Assessment
Document (PAD)
Communication to
Designated
Consumer
Issuance of e-Certs after successful M&V
Verification of PAD
through DENA
Validation of PAD
through DENA &
submission of
compliance doc.
Market for
Trade
Trading of ESCerts
Challenges
• Technical
• Scale of Production (Installed Capacities)
• Use of Raw Material
• Process Technology
• Vintage
• O & M Practices
• Type of Product Output
• Variation in output/product
• Plant boundary
• Variation in fuel quality
• Plant load factor
• Monitoring & Verification
PAT Scheme : Background & Scope
• Covers 478 designated consumers in 8 sectors
• All DCs consume about 165 mtoe energy
• Targets would be given to all DCs to achieve the same
within a time frame
• Achievement > Target
• Achievement < Target
E-Scerts
Purchase E-Scerts / Penalty
• National Target = 6.6 mtoe at the end of 1st PAT Cycle
( by 2014-15)
PAT Scheme : Approach Towards Target
Setting
• Sectoral Target will be on pro-rata basis of energy
consumption among 8 sectors to achieve National Target
• Establishment of Baseline :
• As per reported data of last 5 years (2005-06 to 2009-10)
• Normalization Factor (capacity utilization)
• Arithmetic Average of last 3 years value
• Targets to be statistically calculated based on relative
SEC approach after grouping the DCs suitably
• The target reviewed by an expert committee before
notification
General Rules for Establishing Baseline
• Definitions:
• Baseline Year
• Baseline Production (Pbase)
• Baseline SEC (SECbase)
• Baseline CU% (CUbase)
• Target SEC (SECtarget)
• Target
: 2009-10
: Avg. of 2007-8, 2008-9 & 2009-10
: Avg. of 2007-8, 2008-9 & 2009-10
: Avg. of 2007-8, 2008-9 & 2009-10
: SEC as estimated in 2014-15
: % reduction from SECbase
• Estimation of Energy Saving (MTOE) :
P base ( SEC base – SEC target )
Targets For DCs
Targets for Designated Consumers
Sector
Aluminium
Chlor-Alkali
Textile
Pulp & Paper
Iron & Steel
Fertilizer
Cement
Sub-Total
TPPs
TOTAL
No. of
Identified
DCs
10
22
90
31
67
29
85
334
144
478
Reported
Energy
Consumption
as of now
(MTOE)
7.71
0.88
1.20
2.09
25.32
8.20
15.01
60.41
104.56
164.97
Actual
Energy
Reduction
as of now
(MTOE)
0.455
0.054
0.069
0.118
1.480
0.478
0.815
3.469
3.100
6.569
Earlier
Reported
Energy
Consumption
(MTOE)
7.73
0.84
1.62
2.09
28.00
7.86
11.87
60.01
104.14
164.15
Target Energy
consumption as
approved by
Mop
0.464
0.050
0.130
0.146
1.400
0.393
0.950
3.533
3.124
6.657
Target Energy
consumption as
derived from
Notification Sheet
0.456
0.054
0.066
0.119
1.486
0.478
0.816
3.475
3.211
6.686
Million kcal in Sponge Iron plants
14.00
12.00
10.00
8.00
Million kcal in Sponge Iron plants
6.00
4.00
2.00
0.00
1
2
3
4
5
6
7
8
9
10
11
Electrical SEC in Steel melting shop (kWh/T)
1600.00
1400.00
1200.00
1000.00
800.00
Electrical SEC in Steel melting shop (kWh/T)
600.00
400.00
200.00
0.00
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2
3
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5
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9
10
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12
13
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