National Mission on Enhanced Energy

2. National Mission on Enhanced Energy

The Prime Minister’s Council on Climate Change 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.

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.

Union 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.