Launched in 2008, the Perform, Achieve and Trade (PAT) scheme is a regulatory instrument for reducing specific energy consumption in energy-intensive industries. It comes with an associated market-based mechanism for enhancing the cost effectiveness through certification of excess energy saving which can be traded. The first cycle of the PAT scheme (2012-2015) managed to reduce the energy consumption of over 400 energy-intensive enterprises (known as designated consumers or DCs) by 8.67 million tonnes of oil equivalent (mtoe), 30 per cent higher than the initial target. The government expects to achieve at least 19 mtoe of energy savings in the next two PAT cycles. Here’s a quick look at the scheme’s progress so far…
PAT Cycle I: PAT Cycle I ran from 2012-15, covering 478 DCs from eight energy-intensive sectors. These eight sectors account for roughly 38 per cent of India’s total primary energy consumption. The industry sectors whose energy savings were evaluated were thermal power plants, fertiliser, chlor-alkali, aluminium, iron and steel, pulp and paper, textiles, and cement. For PAT Cycle I, the achievement in respect of 427 DCs was 8.67 mtoe, around 1.25 per cent of the total primary energy supply of India) which was an over achievement of around 30 per cent. This energy saving translates into coal savings of 20 million tonnes (mt) and about 31 mt of CO2 emissions reduction (1.93 per cent of India’s total CO2 emissions). All sectors surpassed their targets except for the thermal power generation sector, which had the highest target of the eight subsectors covered under the PAT programme. The primary reasons for this were the unavailability of new, efficient natural gas power plants and lower-than-expected electricity demand, which subsequently led to a reduction in power plant performance.
The trading of energy saving certificates (ESCerts) is central to the PAT programme and serves as an incentive to reach or surpass the mandatory targets. The ESCerts, equivalent to 1 tonne of oil equivalent (toe) of energy savings, are given based on quantified energy savings verified by an accredited energy auditor. The ESCerts are awarded after a DC surpasses its target and can then be sold to another DC that has failed to achieve its target. The price for ESCerts is determined through market supply and demand. About 1.3 million ESCerts have been traded in the first trading cycle.
PAT Cycle II: The second phase of the PAT scheme (PAT Cycle II) runs from 2016 to 2019, covering 707 units in 11 energy-intensive sectors. PAT Cycle II focuses on the deepening and widening of PAT Cycle I with the inclusion of 61 new DCs from the existing eight sectors and the addition of 170 DCs in three new sectors – railways, refineries and discoms. PAT in its second cycle seeks to achieve an overall energy consumption reduction of 8.869 mtoe for which energy reduction targets have been assigned and notified to DCs in these 11 sectors (eight existing sectors and three new sectors). These energy savings will translate into about 30 mt of CO2 reduction.
PAT Cycle III: In continuation to the rolling cycles of PAT, the third cycle was notified on March 31, 2017. The baseline year was taken as 2015-16, and the target year as 2018-19. The total number of DCs notified was 116 from six sectors – thermal power, iron and steel, cement, aluminum, pulp and paper, and textiles. No new sectors were added in this cycle. The total target was given as 1.06 mtoe, which corresponds to a reduction of around 3 mt of CO2.
PAT Cycle IV: The fourth cycle of PAT was notified on March 28, 2018. The baseline year was taken as 2016-17 and the target year as 2020-21. A total of 106 DCs are expected to achieve a reduction target of 0.6344 mtoe. These DCs are from eight sectors, consisting of the six existing sectors and two new sectors. The new sectors are petrochemicals and buildings. Under the buildings sector, hotels have been selected as the potential designated consumer subsector for this cycle. Other sub-sectors in the buildings sector may come up in the future. Under petrochemicals, naphtha crackers and gas crackers have been considered as potential DC subsectors for this cycle of PAT. The total expected CO2 emissions reduction from PAT IV is around 2 mt.
The way forward
The baseline energy consumption of 621 DCs in PAT Cycle II covers around 52.7 per cent of the total industrial energy consumption (including the newly added sectors). Hence, there is scope for further increasing the reach of the programme, notes the BEE in its recent draft national plan on energy efficiency, UNNATEE. Further, it proposes that the PAT scheme should cover at least 80 per cent of the total industrial energy consumption, targeting large as well as small consumers.
Apart from widening the scope of the PAT programme, it notes that a voluntary PAT programme can be initiated for consumers not identified under the programme. The non-DC participants can be allowed to access the ESCerts market. They may also be given favourable tax benefits for achieving energy efficiency in the sector. Voluntary certification can be considered as positive branding for industries and can help in achieving greater energy efficiency.
In sum, as a policy instrument PAT is the cornerstone of the Enhanced Energy Efficiency Mission and the success of the future PAT cycles will be crucial for achieving India’s climate goals.