Performance Achieve Trade

Indian firms are gearing up for a new green regime called PAT (Performance Achieve Trade). This will ensure that smoke spewing manufacturing units bring down their energy intensity . The scheme would also produce a Rs 75,000 crore energy efficiency market by 2015 in the country.

Century Group, the Rs 5,000 crore diversified conglomerate owned by B K Birla has now turned its focus on how its units comprising textiles cement, pulp & pepper and viscose filament yarn could be made more energy efficient The concern is not restricted to Century Group alone. All manufacturers are looking at ways to bring down energy intensity at their respective units.

A year ago, perhaps one would have linked this over drive to cost cutting measures which companies had undertaken. Even today cost reduction ranks high on every management’s agenda, but the reasons, to achieve higher energy efficiency have changed. Energy audits are being carried out more aggressively than ever before thanks to the energy efficiency scheme , PAT perform , achieve , trade) announced by the Bureau of Energy Efficiency (BEE), the nodal agency spear heading the energy efficiency program in India.

The plan is to give specific energy efficiency targets to every sector in the industry through PAT. Companies will be given specific energy reduction targets which they will have to meet in three years. They can meet their targets either by bringing about changes in their manufacturing processes to reduce energy intensity or by purchasing energy savings certificates from the market. We will design a scheme is such a way so that there can be early price discovery.

PAT is scheduled to be launched in April 2011. This will be done in consultation with individual units. The sectors to be covered by PAT are: aluminum, cement, iron and steel, chlor alkali thermal power plants, fertilizer pulp, & paper textiles and railways. These by and large cover all sectors that directly or indirectly trigger climate change.

BEE has already kicked off the process and is consulting industry bodies to get their views on the proposed format Climate change consultants have swung into action to assist companies in need of information on how the scheme would work and how price discovery would occur. Clearly, trading of ESCerts will create a parallel market dealing with climate change, independent of the Kyoto Protocol. Under Kyoto Protocol’s clean development mechanism (part of UN Framework Convention on Climate Change) Indian companies which got their projects registered were issued carbon credits for off setting green house gas emissions.

Although trading under PAT will be restricted to the domestic market, Industry experts are talking big money for the kind of market it will create. Overall the scheme could generate an energy efficiency market of Rs 75,000 crore by 2015 in India.

The scheme aims to achieve a 5% reduction in overall energy consumption by industries in three years i.e. during 2011-14. After the end of the first phase each industry will submit is PAT assessment document stating the reduction in their specific energy consumption. This report will be validated by an agency designated by BEE.

Manufacturing companies feel that energy efficiency is not a new concept of them it is something they have always endeavored to achieve. We are constantly looking at ways of reducing energy costs, either through specific modifications or replacements. We also get audits done to assist us in the process. so energy efficiency is not a new thing

Consultants however believe that companies would have to get their act together to become PAT prepared. Accordingly companies would need to establish a robust baseline of energy foot print. They would also need to focus on a continuous process improvement to meet and exceed specific energy consumption targeting. For this companies need to graduate from an audit oriented approach in their energy management to a process based performance improvement approach.

At EVI they are geared now for offering such solutions to clients.

It is becoming increasingly evident that the Indian industry needs to look at reduction of emissions beyond those supported by project based off set generation such as CDM. While the project based emissions reduction offset generation enables industries to lap up those opportunities which are not viable without revenue from offset sale, the opportunities of becoming energy and emission efficient on other fronts remain untapped.