The Prime Minister’s Council on Climate Change on Monday approved “in principle” the National Mission on Enhanced Energy Efficiency. The Mission will enable about Rs. 75,000 crore worth transactions in energy efficiency. In doing so, it will, by 2015, help save about five per cent of our annual energy consumption.

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, Prime Minister Manmohan Singh 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.” Dr. Singh also emphasised “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 will 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 purchase 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, will 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.

Power Minister 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 energy savings from the replacement of inefficient pumpsets by BEE 5-star labelled pumpsets would not only pay the ESCO for the investment in pumpsets, but would also reduce the subsidy bill of the State government.

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