1.

Energy Scenario

1. ENERGY SCENARIO
Syllabus
Energy Scenario: Commercial and Non-Commercial Energy, Primary Energy
Resources, Commercial Energy Production, Final Energy Consumption, Energy
Needs of Growing Economy, Long Term Energy Scenario, Energy Pricing, Energy
Sector Reforms, Energy and Environment, Air Pollution, Climate Change, Energy
Security, Energy Conservation and its Importance, Energy Strategy for the Future,
Energy Conservation Act-2001 and its Features.

1.1 Introduction
Energy is one of the major inputs for the economic development of any country. In the case
of the developing countries, the energy sector assumes a critical importance in view of the
ever-increasing energy needs requiring huge investments to meet them.

Energy can be classified into several types based on the following criteria as:

• Primary and Secondary energy

• Commercial and Non commercial energy
• Renewable and Non-Renewable energy

1.2 Primary and Secondary Energy

Primary energy sources

are those that are either
found or stored in nature. Source Extraction Processing Primary energy Secondary
Energy
Common primary energy Open Steam
sources are coal, oil, Coal or Deep Grading Coal
Thermal
Mines
natural gas, and biomass Purification Coke
(such as wood). Other
primary energy sources Hydro

found on earth include Power

Nuclear
nuclear energy from Mining Enrichment Station Electricity

radioactive substances,
thermal energy stored in
Natural gas
earth’s interior, and Gas Well Treatment Natural gas

potential energy due to

earth’s gravity. The Thermal
LPG
major primary and Petroleum Oil
Cracking
and
Petrol
Steam
Well
secondary energy Refining Diesel/fuel oils
Petrochemical
sources are shown in
Figure 1.1 Figure 1.1 Major Primary and Secondary Sources

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Primary energy sources are mostly converted in industrial utilities into secondary energy
sources; for example coal, oil or gas converted into steam and electricity. Primary energy
sources can also be used directly as well. Some energy sources have non-energy uses; for
example coal or natural gas can be used as a feedstock in fertiliser plants.

1.3 Commercial Energy and Non Commercial Energy

Commercial Energy

The energy sources that are available in the market for a definite price are known as
commercial energy. By far the most important forms of commercial energy are electricity,
coal and refined petroleum products. Commercial energy forms the basis of industrial,
agricultural, transport and commercial development in the modern world. In the
industrialized countries, commercialized fuels are predominant source not only for economic
production, but also for many household tasks of general population.

Examples: Electricity, lignite, coal, oil, natural gas etc.

Non-Commercial Energy

The energy sources that are not available in the commercial market for a price are classified
as non-commercial energy. Non-commercial energy sources include fuels such as firewood,
cattle dung and agricultural wastes, which are traditionally gathered, and not bought at a
price used especially in rural households. These are also called traditional fuels. Non-
commercial energy is often ignored in energy accounting.

Example: Firewood, agro waste in rural areas; solar energy for water heating, electricity
generation, for drying grain, fish and fruits; animal power for transport, threshing, lifting
water for irrigation, crushing sugarcane; wind energy for lifting water and electricity
generation.

1.4 Renewable and Non-Renewable Energy

Renewable energy is energy obtained from sources that are essentially inexhaustible.
Examples of renewable resources include wind power, solar power, geothermal energy, tidal
power and hydroelectric power (See Figure 1.2). The most important feature of renewable
energy is that it can be harnessed without the release of harmful pollutants.

Non-renewable energy is the conventional fossil fuels such as coal, oil and gas, which are
likely to deplete with time.

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Renewable Non-Renewable

Figure 1.2 Renewable and Non-Renewable Energy

1.5 Global Primary Energy Reserves*

Coal

The global coal reserve was estimated to be 9,84,453 million tonnes

by end of 2002. The USA had the largest share of the global reserve
(25.4%) followed by Russia (15.9%), China (11.6%). India was 4th in
the list with 8.6%.

Oil

The global proven oil reserve was estimated to be 1047 billion barrels by the end of 2002.
Saudi Arabia had the largest share of the reserve with almost 25%.
(One barrel of oil is approximately 160 litres)

Gas
The global proven gas reserve was estimated to be 156 trillion cubic
metres by the end of 2002. The Russian Federation had the largest
share of the reserve with almost 30%.

(*Source: BP Statistical Review of World Energy, June 2003)

World oil and gas reserves are estimated at just 45 years and 65
years respectively. Coal is likely to last a little over 200 years

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Global Primary Energy Consumption

The global primary energy consumption at the end of 2002 was equivalent to 9405 million
tonnes of oil equivalent (Mtoe). The Figure 1.3 shows in what proportions the sources
mentioned above contributed to this global figure.

Figure 1.3 Global Primary Energy Consumption

The primary energy consumption for few of the developed and developing countries is
shown in Table 1.1. It may be seen that India’s absolute primary energy consumption is only
1/29th of the world, 1/7th of USA, 1/1.6th time of Japan but 1.1, 2.9, 1.3, 1.5 times of Canada,
Australia, France and U.K respectively.

Table 1.1 Primary Energy Consumption by fuel (2002) in Million Tonnes Oil Equivalent
Oil Natural Gas Coal Nuclear Hydro Total Share of
Total
USA 894.3 600.7 553.8 185.8 58.2 2293.0 24.4%
Canada 89.7 72.6 30.7 17.0 78.6 288.7 3.1%
France 92.8 38.5 12.7 98.9 15.0 258.0 2.7%
Russian Federation 122.9 349.6 98.5 32.0 37.2 640.2 6.8%
United Kingdom 77.2 85.1 36.5 19.9 1.7 220.3 2.3%
China 245.7 27.0 663.4 5.9 55.8 997.8 10.6%
India 97.7 25.4 180.8 4.4 16.9 325.1 3.5%
Japan 242.6 69.7 105.3 71.3 20.5 509.4 5.4%
Malaysia 22.5 24.3 3.3 - 1.7 51.8 0.6%
Pakistan 17.9 18.8 2.1 0.4 4.6 43.8 0.5%
Singapore 35.5 1.6 - - - 37.1 0.4%
TOTAL WORLD 3522.5 2282.0 2397.9 610.6 592.1 9405.0

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Energy Distribution Between Developed And Developing Countries

Although 80 percent of the world’s

population lies in the developing countries
(a fourfold population increase in the past
25 years, their energy consumption
amounts to only 40 percent of the world
total energy consumption. The high
standards of living in the developed
countries are attributable to high-energy
consumption levels. Also, the rapid
population growth in the developing
countries has kept the per capita energy
consumption low compared with that of
highly industrialized developed countries. Figure 1.4: Energy Distribution Between Developed
and Developing Countries
The world average energy consumption
per person is equivalent to 2.2 tonnes of
coal. In industrialized countries, people use four to five times more than the world average,
and nine times more than the average for the developing countries. An American uses 32
times more commercial energy than an Indian.

1.6 Indian Energy Scenario

Coal dominates the energy mix in India, contributing to 55% of the total primary energy
production. Over the years, there has been a marked increase in the share of natural gas in
primary energy production from 10% in 1994 to 13% in 1999. There has been a decline in
the share of oil in primary energy production from 20% to 17% during the same period.

Energy Supply

Coal Supply

India has huge coal reserves, at least 84,396 Million tonnes of proven recoverable reserves
(at the end of 2002). This amounts to almost 8.6% of the world reserves and it may last for
about 235 years at the current Reserve to Production (R/P) ratio. In contrast, the world’s
proven coal reserves are expected to last only for 204 years at the current R/P ratio.

Reserves/Production (R/P) ratio- If the reserves remaining at the end of the year are divided
by the production in that year, the result is the length of time that the remaining reserves
would last if production were to continue at that level.

India is the fourth largest producer of coal and lignite in the world. Coal production is
concentrated in these states (Andhra Pradesh, Bihar, Madhya Pradesh, Maharashtra, Orissa,
Jharkhand, West Bengal).

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Oil Supply

Oil accounts for about 33 % of India's total energy consumption. While India has invested
considerable resources in this sector, the crude oil production has stagnated at around 32-33
million metric tonnes per year over the past decade. The majority of India's roughly 5.4
billion barrels in oil reserves are located in the Bombay High, upper Assam, Cambay,
Krishna-Godavari, and Cauvery basins. India's average oil production level for 2002 was
793,000 barrels per day. The consumption continues to outstrip production and. about 70% of
the total petroleum product demand is met by imports imposing a heavy burden on foreign
exchange. India had net oil imports of over 1.2 million barrels per day in 2002. India’s
annual current oil import bill is around Rs.80,000 crores. In terms of sector wise petroleum
product consumption, transport accounts for 53% followed by domestic and industry with
18% and 17% respectively.

Natural Gas Supply

Natural gas accounts for about 8 per cent of energy consumption in the country. The current
demand for natural gas is about 96 million cubic metres per day (mcmd) as against
availability of 67 mcmd. By 2007, the demand is expected to be around 200 mcmd. Natural
gas reserves are estimated at 660 billion cubic meters.

Electrical Energy Supply

The all India installed capacity of electric power generating
stations under utilities was 1,07,973 MW as on 31st March
2003, consisting of 26,910 MW- hydro, 76,607 MW - thermal
and 2,720 MW- nuclear and 1,736 MW- wind (Ministry of
Power).

The gross generation of power in the year 2002-2003 stood at

531 billion units (kWh).

Nuclear Power Supply

Nuclear Power contributes to about 2.5 per cent of electricity generated in India. India has
ten nuclear power reactors at five nuclear power stations producing electricity. More nuclear
reactors have also been approved for construction.

Hydro Power Supply

India is endowed with a vast and viable hydro potential for power generation of which only
15% has been harnessed so far. The share of hydropower in the country’s total generated
units has steadily decreased and it presently stands at 25% as on 31st March 2003. It is
assessed that exploitable potential at 60% load factor is 84,000 MW.

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Final Energy Consumption

Final energy consumption is the actual energy demand at the user end. This is the difference
between primary energy consumption and the losses that takes place in transport,
transmission & distribution and refinement. The actual final energy consumption (past and
projected) is given in Table 1.2.

Table 1.2 Demand for Commercial Energy for Final Consumption (BAU Scenario)
Source Units 1994-95 2001-02 2006-07 2011-12
Electricity Billion Units 289.36 480.08 712.67 1067.88
Coal Million Tonnes 76.67 109.01 134.99 173.47
Lignite Million Tonnes 4.85 11.69 16.02 19.70
Natural Gas Million Cubic Meters 9880 15730 18291 20853
Oil Products Million Tonnes 63.55 99.89 139.95 196.47
Source: Planning Commission BAU:_Business As Usual

Sector wise Energy Consumption in India

The major commercial energy consuming sectors in

the country are classified as shown in the Figure 1.5.
As seen from the figure, industry remains the biggest
consumer of commercial energy and its share in the
overall consumption is 49%. (Reference year:
1999/2000)

Figure 1.5 Sector Wise Energy

Consumption (1999-2000)
1.7 Energy Needs of Growing Economy

Economic growth is desirable for developing countries, and energy is essential for economic
growth. However, the relationship between economic growth and increased energy demand
is not always a straightforward linear one. For example, under present conditions, a 6%
increase in India's Gross Domestic Product (GDP) would impose an increased demand of
9 % on its energy sector.

In this context, the ratio of energy demand to GDP is a useful indicator. A high ratio reflects
energy dependence and a strong influence of energy on GDP growth. It is worthwhile to note
that developed countries − by focusing on energy efficiency and lower energy-intensive
routes − maintain their energy to GDP ratios at values of less than 1. The ratios for
developing countries tend to be much higher.

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 1. Energy Scenario

India’s Energy Needs

800000 35 The plan outlay

700000 vis-à-vis share of

% Share of Energy Sector

30
energy is given in
Plan Outlay Rs Crores

600000
25 Figure 1.6. As
500000 seen from the
20
400000
Figure, 30 % of
15 the total five-year
300000 plan outlay is
200000
10 spent on the
5
energy sector.
100000

0 0
1951-56 1956-61 1961-66 1969-74 1974-79 1980-85 1985-90 1992-97 1997-02
Figure 1.1.15 Plan outlay vs. Share of Energy
Period

Plan Outlay Rs. Crores % Share of Energy Sector

Figure 1.6 Expenditure Towards Energy Sector

Per Capita Energy Consumption

The per capita energy consumption (see Figure 1.7) is too low for India as compared to
developed countries. It is just 4% of USA and 20% of the world average. The per capita
consumption is likely to grow in India with growth in economy thus increasing the energy
demand.

Figure 1.7 Per Capita Energy Consumption

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Energy Intensity

Energy intensity is energy consumption per unit of GDP. Energy intensity indicates the
development stage of the country. India’s energy intensity is 3.7 times of Japan, 1.55 times of
USA, 1.47 times of Asia and 1.5 times of World average.

1.8 Long Term Energy Scenario-India

Coal

Coal is the primary energy source for power production in India, generating approximately
70% of total domestic electricity. Energy demand in India is expected to increase over the
next 10-15 years; although new oil and gas plants are planned, coal is expected to remain the
dominant fuel for power generation. Despite significant increases in total installed capacity
during the last decade, the gap between electricity supply and demand continues to increase.
The resulting shortfall has had a negative impact on industrial output and economic growth.
However, to meet expected future demand, indigenous coal production will need to be
greatly expanded. Production currently stands at around 290 Million tonnes per year, but coal
demand is expected to more than double by 2010. Indian coal is typically of poor quality;
Coal imports will also need to increase dramatically to satisfy industrial and power
generation requirements.

Oil

India's demand for petroleum products is

likely to rise from 97.7 million tonnes in
2001-02 to around 139.95 million tonnes
in 2006-07, according to projections of the
Tenth Five-Year Plan. The plan document
puts compound annual growth rate
(CAGR) at 3.6 % during the plan period.
Domestic crude oil production is likely to
rise marginally from 32.03 million tonnes
in 2001-02 to 33.97 million tonnes by the
end of the 10th plan period (2006-07). As
shown in the figure 1.8, around 92% of
India’s total oil demand by 2020 has to be
met by imports. Figure 1.8 India’s Oil Balance

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160000
142700

140000

120000

100000

80000

60000

40000
700 97.7 3522.5
20000

0
Proved Reserve Consumption
India 700 97.7
World 142700 3522.5

Figure 1.9 Proven Oil Reserve / Consumption (in Million Tonnes)

India Vs World (At End 2002)

Natural Gas

India's natural gas production is likely to rise from 86.56 million cmpd in 2002-03 to 103.08
million cmpd in 2006-07. It is mainly based on the strength of a more than doubling of
production by private operators to 38.25 mm cmpd.

Electricity

India currently has a peak demand shortage of around 14% and an energy deficit of 8.4%.
Keeping this in view and to maintain a GDP (gross domestic product) growth of 8% to 10%,
the Government of India has very prudently set a target of 215,804 MW power generation
capacity by March 2012 from the level of 100,010 MW as on March 2001, that is a capacity
addition of 115,794 MW in the next 11 years (Table 1.3).

Table 1.3 India’s Perspective Plan For Power For Zero Deficit Power By 2011/12
(Source Tenth And Eleventh Five-Year Plan Projections)
Thermal Gas / LNG / Nuclear Hydro
Total(MW)
(Coal) (MW) Diesel (MW) (MW) (MW)
Installed capacity as on Gas: 10,153
61,157 2720 25,116 100,010
March 2001 Diesel: 864
Additional capacity
53,333 20,408 9380 32,673 115,794
(2001-2012)
Total capacity as on 114,490 31,425 12,100 57,789
215,804
March 2012 (53.0%) (14.6%) (5.6%) (26.8%)

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 1. Energy Scenario

In the area of nuclear power the objective is to achieve 20,000 MW of nuclear generation
capacity by the year 2020.

1.9 Energy Pricing in India

Price of energy does not reflect true cost to society. The basic assumption underlying
efficiency of market place does not hold in our economy, since energy prices are undervalued
and energy wastages are encouraged. Pricing practices in India like many other developing
countries are influenced by political, social and economic compulsions at the state and
central level. More often than not, this has been the foundation for energy sector policies in
India. The Indian energy sector offers many examples of cross subsidies e.g., diesel, LPG
and kerosene being subsidised by petrol, petroleum products for industrial usage and
industrial, and commercial consumers of electricity subsidising the agricultural and domestic
consumers.

Coal

Grade wise basic price of coal at the pithead excluding statutory levies for run-of-mine
(ROM) coal are fixed by Coal India Ltd from time to time. The pithead price of coal in India
compares favourably with price of imported coal. In spite of this, industries still import coal
due its higher calorific value and low ash content.

Oil

As part of the energy sector reforms, the government has attempted to bring prices for many
of the petroleum products (naphtha, furnace oil, LSHS, LDO and bitumen) in line with
international prices. The most important achievement has been the linking of diesel prices to
international prices and a reduction in subsidy. However, LPG and kerosene, consumed
mainly by domestic sectors, continue to be heavily subsidised. Subsidies and cross-subsidies
have resulted in serious distortions in prices, as they do not reflect economic costs at all in
many cases.

Natural Gas

The government has been the sole authority for fixing the price of natural gas in the country.
It has also been taking decisions on the allocation of gas to various competing consumers.
The gas prices varies from Rs 5 to Rs.15 per cubic metre.

Electricity

Electricity tariffs in India are structured in a relatively simple manner. While high tension
consumers are charged based on both demand (kVA) and energy (kWh), the low-tension
(LT) consumer pays only for the energy consumed (kWh) as per tariff system in most of the
electricity boards. The price per kWh varies significantly across States as well as customer
segments within a State. Tariffs in India have been modified to consider the time of usage
and voltage level of supply. In addition to the base tariffs, some of the State Electricity

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Boards have additional recovery from customers in form of fuel surcharges, electricity duties
and taxes. For example, for an industrial consumer the demand charges may vary from Rs.
150 to Rs. 300 per kVA, whereas the energy charges may vary anywhere between Rs. 2 to
Rs. 5 per kWh..

As for the tariff adjustment mechanism, even when some of the States have regulatory
commissions for tariff review, the decisions to effect changes are still political and there is no
automatic adjustment mechanism, which can ensure recovery of costs for the electricity
boards.

1.10 Energy Sector Reforms

Since the initiation of economic reforms in India in 1991, there has been a growing
acceptance of the need for deepening these reforms in several sectors of the economy, which
were essentially in the hands of the government for several decades. It is now been realized
that if substance has to be provided to macroeconomic policy reform, then it must be based
on reforms that concern the functioning of several critical sectors of the economy, among
which the infrastructure sectors in general and the energy sector in particular, are paramount.

Coal

The government has recognized the need for new coal policy initiatives and for
rationalization of the legal and regulatory framework that would govern the future
development of this industry. One of the key reforms is that the government has allowed
importing of coal to meet our requirements. Private sector is now allowed to participate in the
extraction and marketing of coal.

The ultimate objective of some of the ongoing measures and others under consideration is to
see that a competitive environment is created for the functioning of various entities in this
industry. This would not only bring about gains in efficiency but also effect cost reduction,
which would consequently ensure supply of coal on a larger scale at lower prices.
Competition would also have the desirable effect of bringing in new technology, for which
there is an urgent and overdue need since the coal industry has suffered a prolonged period of
stagnation in technological innovation.

Oil and Natural Gas

Since 1993, private investors have been allowed to import and market liquefied petroleum
gas (LPG) and kerosene freely; private investment is also been allowed in lubricants, which
are not subject to price controls. Prices for naphtha and some other fuels have been
liberalized. In 1997 the government introduced the New Exploration Licensing Policy
(NELP) in an effort to promote investment in the exploration and production of domestic oil
and gas. In addition, the refining sector has been opened to private and foreign investors in
order to reduce imports of refined products and to encourage investment in downstream
pipelines. Attractive terms are being offered to investors for the construction of liquefied
natural gas (LNG) import facilities.

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Electricity

Following the enactment of the Electricity Regulatory Commission Legislation, the Central
Electricity Regulatory Commission (CERC) was set up, with the main objective of regulating
the Central power generation utilities. State level regulatory bodies have also been set up to
set tariffs and promote competition. Private investments in power generation were also
allowed. The State SEBs were asked to switch over to separate Generation, Transmission and
Distribution corporations. While, India currently does not have a unified national power grid,
the country plans to link the SEB grids eventually, and has set up a state company,
Powergrid, to oversee the unification.

Electricity Act, 2003

The government has enacted Electricity Act, 2003, which seeks to bring about a qualitative
transformation of the electricity sector through a new paradigm. The Act seeks to create
liberal framework of development for the power sector by distancing Government from
regulation. It replaces the three existing legislations, namely, Indian Electricity Act, 1910, the
Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998. The
objectives of the Act are “to consolidate the laws relating to generation, transmission,
distribution, trading and use of electricity and generally for taking measures conducive to
development of electricity industry, promoting competition therein, protecting interest of
consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring
transparent policies regarding subsidies, promotion of efficient and environmentally benign
policies, constitution of Central Electricity Authority, Regulatory Commissions and
establishment of Appellate Tribunal and for matters connected therewith or incidental
thereto.”

The Act strikes a balance, which takes into account the complex ground realities of the power
sector in India with its intractable problems.

The salient features of the Electricity Act, 2003 are:

i) The Central Government to prepare a National Electricity Policy in consultation with State
Governments. (Section 3)

ii) Thrust to complete the rural electrification and provide for management of rural
distribution by Panchayats, Cooperative Societies, non-Government organisations,
franchisees etc. (Sections 4, 5 & 6)

iii) Provision for licence free generation and distribution in the rural areas. (Section 14)
iv) Generation being delicensed and captive generation being freely permitted. Hydro
projects would, however, need clearance from the Central Electricity Authority. (Sections 7,
8 & 9)

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 1. Energy Scenario

v) Transmission Utility at the Central as well as State level, to be a Government company –

with responsibility for planned and coordinated development of transmission network.
(Sections 38 & 39)

vi) Provision for private licensees in transmission and entry in distribution through an
independent network, (Section 14)

vii) Open access in transmission from the outset. (Sections 38-40)

viii) Open access in distribution to be introduced in phases with surcharge for current level of
cross subsidy to be gradually phased out along with cross subsidies and obligation to supply.
SERCs to frame regulations within one year regarding phasing of open access. (Section 42)

ix) Distribution licensees would be free to undertake generation and generating companies
would be free to take up distribution businesses. (Sections 7, 12)

x) The State Electricity Regulatory Commission is a mandatory requirement. (Section 82)

xi) Provision for payment of subsidy through budget. (Section 65)

xii) Trading, a distinct activity is being recognised with the safeguard of the Regulatory
Commissions being authorised to fix ceilings on trading margins, if necessary. (Sections 12,
79 & 86)

xiii) Provision for reorganisation or continuance of SEBs. (Sections 131 & 172)

xiv) Metering of all electricity supplied made mandatory. (Section 55)

xv) An Appellate Tribunal to hear appeals against the decision of the CERC and
SERCs. (Section 111)

xvi) Provisions relating to theft of electricity made more stringent. (Section 135-150)

xvii) Provisions safeguarding consumer interests. (Sections 57-59, 166) Ombudsman scheme
(Section 42) for consumers grievance redressal.

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1.11 Energy and Environment

Air Pollution
Inputs Process Outputs
The usage of energy resources in Emission Emission
industry leads to environmental from from
process combustion
damages by polluting the atmosphere.
Few of examples of air pollution are Energy
sulphur dioxide (SO2), nitrous oxide Industrial
W ater Products
(NOX) and carbon monoxide (CO) Chemical Process
emissions from boilers and furnaces, Raw
chloro-fluro carbons (CFC) emissions Material

from refrigerants use, etc. In chemical Solid/ Direct/Indirect

Energy waste
and fertilizers industries, toxic gases are Liquid
waste
released. Cement plants and power
plants spew out particulate matter.
Figure 1.10 Inputs & Outputs of Process
Typical inputs, outputs, and emissions
for a typical industrial process are
shown in Figure 1.10. Sources of major pollutants in air and average composition of
pollutants are given in Table 1.4 and Table 1.5 respectively.

Table 1.4 Major Pollutants in Air Sources

S.No. Source %
1 Fuel combustion 42
in transport
2 Industry 35
3 Forest fire 8
4 Solild waste disposal 5
5 Miscellaneous 10

Table 1.5 Composition of Major Pollutants in Air

S. No. Pollutant %
1 Carbon Monoxide 47
2 Hydro Carbons 15
3 Sulphur Oxides 15
4 Nitrogen Oxides 10
5 Particulates 13

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Global Warming and Climate Change

Climate change, also called global warming, refers to the long-term fluctuations in
temperature, precipitation, wind and other elements of the earth’s climate system. The energy
use has attracted huge attention in present times due to its associated global climatic impacts.

Figure 1.11 The Greenhouse Effect

Increasing fossil fuel use has led to increasing carbondioxide emissions leading to
greenhouse effect and global warming (see Figure. 1.11). The heating up of earth’s
atmosphere due to trapping of long wavelength infrared rays (reflected from the earth’s
surface) by the carbondioxide layer in the atmosphere is called green house effect. The name
greenhouse effect comes from the fact that this effect is used usefully in horticulture for the
growing green plants in a enclosure made of glass or some other transparent material to act as
a heat trap. Scientists generally believe that the combustion of fossil fuels and other human
activities are the primary reason for the increased concentration of carbon dioxide. Plant
respiration and the decomposition of organic matter release more than 10 times the CO2
released by human activities; but these releases have generally been in balance during the
centuries with carbon dioxide being absorbed by terrestrial vegetation and the oceans.

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 1. Energy Scenario

The key greenhouse gases driving global Nitrous oxide

warming are shown in Figure 1.12. Carbon Ozone 6%
dioxide, whose increase is largely produced 7%

by the burning of fossil fuels, is the primary

Methane
global warming gas. CFC's, even though they 12%
exist in very small quantities, are significant
contributors to global warming. And, (while Carbondioxide
54%
not shown in Figure 1.12), perfluorocarbons
(PFC's), sulfur hexafluoride (SF6) and hydro CFC
fluorocarbons (HFC's) are other growing 21%
contributors.
Figure 1.12 %Share of Greenhouse Gases

Carbondioxide, one of the most prevalent greenhouse gases in the atmosphere, has two major
anthropogenic (human-caused) sources: the combustion of fossil fuels and changes in land
use (see figure:1.13). Net releases of carbon dioxide from these two sources are believed to
be contributing to the rapid rise in atmospheric concentrations since pre-industrial times.

Figure 1.13 CO2

Sources

Because estimates indicate that approximately 80 percent of all anthropogenic carbondioxide

emissions currently come from fossil fuel combustion, world energy use has emerged at the
center of the climate change debate.

International accords, began in Rio de Janeiro in 1992 (Rio Earth Summit), wherein
developed nations were asked to reduce GHG emission to 1990 levels by the year 2000. New
levels of commitment were taken in the third Conference of Parties (COP) on “The

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Framework Convention on Climate Change”, held at Kyoto in 1997 (Kyoto Protocol), which
made GHG reductions mandatory for 38 developed nations with average reduction of 5.2%
below 1990 levels by 2012. The emergence of the Clean Development Mechanism (CDM) as
a framework for the involvement of industrialized countries in the developing world may
lead to financing opportunities for energy efficiency projects. (For more information, see
chapter-9).

Table 1.6 Climate has Changed and Will Continue to Change

– Global mean temperature is increasing- – Projected temperature increase of 2 o C by
0.3 to 0.6 o C year 2100
– Global sea level has risen: 10 to 25 cm – Projected sea level rise of 50 cm by year
2100

Acid Rain

Acid rain is caused by release of SOX and NOX from combustion of fossil fuels, which then
mix with water vapour in atmosphere to form sulphuric and nitric acids respectively. The
effects of acid rain are as follows:
• Acidification of lakes, streams, and soils
• Direct and indirect effects (release of metals, For example: Aluminum which washes
away plant nutrients)
• Killing of wildlife (trees, crops, aquatic plants, and animals)
• Decay of building materials and paints, statues, and sculptures
• Health problems (respiratory, burning- skin and eyes)

Figure 1.14

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 1. Energy Scenario

1.12 Energy Security

The basic aim of energy security for a nation is to reduce its dependency on the imported
energy sources for its economic growth.

India will continue to experience an energy supply shortfall throughout the forecast period.
This gap has been exacerbated since 1985, when the country became a net importer of coal.
India has been unable to raise its oil production substantially in the 1990s. Rising oil demand
of close to 10 percent per year has led to sizable oil import bills. In addition, the government
subsidises refined oil product prices, thus compounding the overall monetary loss to the
government.

Imports of oil and coal have been increasing at rates of 7% and 16% per annum respectively
during the period 1991–99. This dependence on energy imports is projected to increase in the
future. Estimates indicate that oil imports will meet 75% of total oil consumption
requirements and coal imports will meet 22% of total coal consumption requirements in
2006. At present, India does not import any natural gas, but demand is supply constrained
and imports of gas and LNG (liquefied natural gas) are likely to arise in the coming years.
This energy import dependence implies vulnerability to external price shocks and supply
fluctuations, which threaten the energy security of the country.

Increasing dependence on oil imports means reliance on imports from the Middle East, a
region susceptible to disturbances and consequent disruptions of oil supplies. This calls for
diversification of sources of oil imports. The need to deal with oil price fluctuations also
necessitates measures to be taken to reduce the oil dependence of the economy, possibly
through fiscal measures to reduce demand, and by developing alternatives to oil, such as
natural gas and renewable energy.

Some of the strategies that can be used to meet future challenges to their energy security are
ƒ Building stockpiles
ƒ Diversification of energy supply sources
ƒ Increased capacity of fuel switching
ƒ Demand restraint,
ƒ Development of renewable energy sources.
ƒ Energy efficiency
ƒ Sustainable development

Although all these options are feasible, their implementation will take time. Also, for
countries like India, reliance on stockpiles would tend to be slow because of resource
constraints. Besides, the market is not sophisticated enough or the monitoring agencies
experienced enough to predict the supply situation in time to take necessary action.
Insufficient storage capacity is another cause for worry and needs to be augmented, if India
has to increase its energy stockpile.

However, out of all these options, the simplest and the most easily attainable is reducing
demand through persistent energy conservation efforts.

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 1. Energy Scenario

1.13 Energy Conservation and its Importance

Coal and other fossil fuels, which have
taken three million years to form, are
likely to deplete soon. In the last two
hundred years, we have consumed 60%
of all resources. For sustainable
development, we need to adopt energy
efficiency measures.

Today, 85% of primary energy comes

from non-renewable, and fossil sources
(coal, oil, etc.). These reserves are
continually diminishing with increasing
consumption and will not exist for future Figure 1.15
generations (see Figure 1.15).

What is Energy Conservation?

Energy Conservation and Energy Efficiency are separate, but related concepts. Energy
conservation is achieved when growth of energy consumption is reduced, measured in
physical terms. Energy Conservation can, therefore, be the result of several processes or
developments, such as productivity increase or technological progress. On the other hand
Energy efficiency is achieved when energy intensity in a specific product, process or area of
production or consumption is reduced without affecting output, consumption or comfort
levels. Promotion of energy efficiency will contribute to energy conservation and is therefore
an integral part of energy conservation promotional policies.

Energy efficiency is often viewed as a resource option like coal, oil or natural gas. It provides
additional economic value by preserving the resource base and reducing pollution. For
example, replacing traditional light bulbs with Compact Fluorescent Lamps (CFLs) means
you will use only 1/4th of the energy to
light a room. Pollution levels also reduce Energy Efficient Equipment uses less energy
by the same amount. for same output and reduces CO2 emissions

Nature sets some basic limits on how

efficiently energy can be used, but in
most cases our products and
manufacturing processes are still a long
way from operating at this theoretical
limit. Very simply, energy efficiency
means using less energy to perform the Incandescent Lamp Compact fluorescent Lamp
same function. 60 W 15 W

CO2 Emission – 65 g/hr CO2 Emission – 16 g/hr

Figure 1.16

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 1. Energy Scenario

Although, energy efficiency has been in practice ever since the first oil crisis in 1973, it has
today assumed even more importance because of being the most cost-effective and reliable
means of mitigating the global climatic change. Recognition of that potential has led to high
expectations for the control of future CO2 emissions through even more energy efficiency
improvements than have occurred in the past. The industrial sector accounts for some 41 per
cent of global primary energy demand and approximately the same share of CO2 emissions.
The benefits of Energy conservation for various players are given in the figure 1.17.

E n e rg y E ffic ie n c y B e n e fits
In d u stry N a tio n G lo b e

• R e d u c e d e n e rg y • R e d u c e d e n e rg y • R educed G H G and
b ills im p o rts o th e r e m issio n s
• In c re a se d • A v o id e d c o sts c a n • M a in ta in s a
C o m p e titiv e n e ss b e u se d fo r p o v e rty su sta in a b le
• In c re a se d re d u c tio n e n v iro n m e n t
p ro d u c tiv ity • C o n se rv a tio n o f
• Im p ro v e d q u a lity lim ite d re so u rc e s
• In c re a se d p ro fits ! • Im p ro v e d e n e rg y
se c u rity

Figure 1.17

1.14 Energy Strategy for the Future

The energy strategy for the future could be classified into immediate, medium- and long-term
strategy. The various components of these strategies are listed below:

Immediate-term strategy:
• Rationalizing the tariff structure of various energy products.
• Optimum utilization of existing assets
• Efficiency in production systems and reduction in distribution losses, including those
in traditional energy sources.
• Promoting R&D, transfer and use of technologies and practices for environmentally
sound energy systems, including new and renewable energy sources.

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 1. Energy Scenario

Medium-term strategy:

• Demand management through greater conservation of energy, optimum fuel mix,

structural changes in the economy, an appropriate modal mix in the transport sector,
i.e. greater dependence on rail than on road for the movement of goods and
passengers and a shift away from private modes to public modes for passenger
transport; changes in design of different products to reduce the material intensity of
those products, recycling, etc.

• There is need to shift to less energy-intensive modes of transport. This would include
measures to improve the transport infrastructure viz. roads, better design of vehicles,
use of compressed natural gas (CNG) and synthetic fuel, etc. Similarly, better urban
planning would also reduce the demand for energy use in the transport sector.

• There is need to move away from non-renewable to renewable energy sources viz.
solar, wind, biomass energy, etc.

Long-term strategy:

¾ Efficient generation of energy resources

• Efficient production of coal, oil and natural gas
• Reduction of natural gas flaring

¾ Improving energy infrastructure

• Building new refineries
• Creation of urban gas transmission and distribution network
• Maximizing efficiency of rail transport of coal production.
• Building new coal and gas fired power stations.

¾ Enhancing energy efficiency

• Improving energy efficiency in accordance with national, socio-economic, and
environmental priorities
• Promoting of energy efficiency and emission standards
• Labeling programmes for products and adoption of energy efficient
technologies in large industries

¾ Deregulation and privatization of energy sector

• Reducing cross subsidies on oil products and electricity tariffs
• Decontrolling coal prices and making natural gas prices competitive
• Privatization of oil, coal and power sectors for improved efficiency.

¾ Investment legislation to attract foreign investments.

• Streamlining approval process for attracting private sector participation in
power generation, transmission and distribution .

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 1. Energy Scenario

1.15 The Energy Conservation Act, 2001 and its Features

Policy Framework – Energy Conservation Act – 2001

With the background of high energy saving potential and its benefits, bridging the gap
between demand and supply, reducing environmental emissions through energy saving, and
to effectively overcome the barrier, the Government of India has enacted the Energy
Conservation Act – 2001. The Act provides the much-needed legal framework and
institutional arrangement for embarking on an energy efficiency drive.

Under the provisions of the Act, Bureau of Energy Efficiency has been established with
effect from 1st March 2002 by merging erstwhile Energy Management Centre of Ministry of
Power. The Bureau would be responsible for implementation of policy programmes and
coordination of implementation of energy conservation activities.

Important features of the Energy Conservation Act are:

Standards and Labeling

Standards and Labeling (S & L) has been identified as a key activity for energy efficiency
improvement. The S & L program, when in place would ensure that only energy efficient
equipment and appliance would be made available to the consumers.

The main provision of EC act on Standards and Labeling are:

• Evolve minimum energy consumption and performance standards for notified

equipment and appliances.

• Prohibit manufacture, sale and import of such equipment, which does not confirm to
the standards.

• Introduce a mandatory labeling scheme for notified equipment appliances to enable

consumers to make informed choices

• Disseminate information on the benefits to consumers

Designated Consumers
The main provisions of the EC Act on designated consumers are:

• The government would notify energy intensive industries and other establishments as
designated consumers;

• Schedule to the Act provides list of designated consumers which covered basically
energy intensive industries, Railways, Port Trust, Transport Sector, Power Stations,

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 1. Energy Scenario

Transmission & Distribution Companies and Commercial buildings or

establishments;

• The designated consumer to get an energy audit conducted by an accredited energy

auditor;

• Energy managers with prescribed qualification are required to be appointed or

designated by the designated consumers;

• Designated consumers would comply with norms and standards of energy

consumption as prescribed by the central government.

Certification of Energy Managers and Accreditation of Energy Auditing Firms

The main activities in this regard as envisaged in the Act are:

A cadre of professionally qualified energy managers and auditors with expertise in policy
analysis, project management, financing and implementation of energy efficiency projects
would be developed through Certification and Accreditation programme. BEE to design
training modules, and conduct a National level examination for certification of energy
managers and energy auditors.

Energy Conservation Building Codes:

The main provisions of the EC Act on Energy Conservation Building Codes are:

• The BEE would prepare guidelines for Energy Conservation Building Codes (ECBC);

• These would be notified to suit local climate conditions or other compelling factors
by the respective states for commercial buildings erected after the rules relating to
energy conservation building codes have been notified. In addition, these buildings
should have a connected load of 500 kW or contract demand of 600 kVA and above
and are intended to be used for commercial purposes;

• Energy audit of specific designated commercial building consumers would also be

prescribed.

Central Energy Conservation Fund:

The EC Act provisions in this case are:

• The fund would be set up at the centre to develop the delivery mechanism for large-
scale adoption of energy efficiency services such as performance contracting and
promotion of energy service companies. The fund is expected to give a thrust to R &
D and demonstration in order to boost market penetration of efficient equipment and

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 1. Energy Scenario

appliances. It would support the creation of facilities for testing and development and
to promote consumer awareness.

Bureau of Energy Efficiency (BEE) :

• The mission of Bureau of Energy Efficiency is to institutionalize energy efficiency

services, enable delivery mechanisms in the country and provide leadership to energy
efficiency in all sectors of economy. The primary objective would be to reduce
energy intensity in the Indian Economy.

• The general superintendence, directions and management of the affairs of the Bureau
is vested in the Governing Council with 26 members. The Council is headed by
Union Minister of Power and consists of members represented by Secretaries of
various line Ministries, the CEOs of technical agencies under the Ministries, members
representing equipment and appliance manufacturers, industry, architects, consumers
and five power regions representing the states. The Director General of the Bureau
shall be the ex-officio member-secretary of the Council.

• The BEE will be initially supported by the Central Government by way of grants
through budget, it will, however, in a period of 5-7 years become self-sufficient. It
would be authorized to collect appropriate fee in discharge of its functions assigned to
it. The BEE will also use the Central Energy Conservation Fund and other funds
raised from various sources for innovative financing of energy efficiency projects in
order to promote energy efficient investment.

Role of Bureau of Energy Efficiency

• The role of BEE would be to prepare standards and labels of appliances and
equipment, develop a list of designated consumers, specify certification and
accreditation procedure, prepare building codes, maintain Central EC fund and
undertake promotional activities in co-ordination with center and state level agencies.
The role would include development of Energy service companies (ESCOs),
transforming the market for energy efficiency and create awareness through measures
including clearing house.

Role of Central and State Governments:

The following role of Central and State Government is envisaged in the Act

• Central - to notify rules and regulations under various provisions of the Act, provide
initial financial assistance to BEE and EC fund, Coordinate with various State
Governments for notification, enforcement, penalties and adjudication.

• State - to amend energy conservation building codes to suit the regional and local
climatic condition, to designate state level agency to coordinate, regulate and enforce

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 1. Energy Scenario

provisions of the Act and constitute a State Energy Conservation Fund for promotion
of energy efficiency.

Enforcement through Self-Regulation:

E.C. Act would require inspection of only two items. The following procedure of self-
regulation is proposed to be adopted for verifying areas that require inspection of only two
items that require inspection.

• The certification of energy consumption norms and standards of production process

by the Accredited Energy Auditors is a way to enforce effective energy efficiency in
Designated Consumers.

• For energy performance and standards, manufacturers declared values would be

checked in Accredited Laboratories by drawing sample from market. Any
manufacturer or consumer or consumer association can challenge the values of the
other manufacturer and bring to the notice of BEE. BEE can recognize for challenge
testing in disputed cases as a measure for self-regulation.

Penalties and Adjudication:

• Penalty for each offence under the Act would be in monetary terms i.e. Rs.10,000 for
each offence and Rs.1,000 for each day for continued non Compliance.

• The initial phase of 5 years would be promotional and creating infrastructure for
implementation of Act. No penalties would be effective during this phase.

• The power to adjudicate has been vested with state Electricity Regulatory
Commission which shall appoint any one of its member to be an adjudicating officer
for holding an enquiry in connection with the penalty imposed.

Features Extracted from The Energy Conservation Act, 2001.

CHAPTER -I

Definitions

In this Act, unless the context otherwise requires: —

(a) “accredited energy auditor” means an auditor possessing qualifications specified under
clause (p) of sub-section (2) of section 13;
(b) “ Appellate Tribunal” means Appellate Tribunal for Energy Conservation established
under section 30;

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 1. Energy Scenario

(c) “building” means any structure or erection or part of a structure or erection, after the
rules relating to energy conservation building codes have been notified under clause (a)
of section 15 of clause (l) of sub-section (2) of section 56, which is having a connected
load of 500kW or contract demand of 600 kVA and above and is intended to be used for
commercial purposes;

(d) “Bureau” means the Bureau of Energy Efficiency established under subsection (l) of
section 3;
(e) “Chairperson” means the Chairperson of the Governing council;
(f) “designated agency” means any agency designated under clause (d) of section 15;
(g) “designated consumer” means any consumer specified under clause (e) of section 14;
(h) “energy” means any form of energy derived from fossil fuels, nuclear substances or
materials, hydro-electricity and includes electrical energy or electricity generated from
renewable sources of energy or bio-mass connected to the grid;
(i) “energy audit” means the verification, monitoring and analysis of use of energy
including submission of technical report containing recommendations for improving
energy efficiency with cost benefit analysis and an action plan to reduce energy
consumption;
(j) “energy conservation building codes” means the norms and standards of energy
consumption expressed in terms of per square meter of the area wherein energy is used
and includes the location of the building;
(k) “energy consumption standards” means the norms for process and energy consumption
standards specified under clause (a) of section 14;
(l) “Energy Management Centre” means the Energy Management Centre set up under the
Resolution of the Government of India in the erstwhile Ministry of Energy, Department
of Power No. 7(2)/87-EP (Vol. IV), dated the 5th July, 1989 and registered under the
Societies Registration Act, 1860; (21 of 1860)
(m) “energy manager” means any individual possessing the qualifications prescribed under
clause (m) of section 14;
(n) “ Governing Council” means the Governing Council referred to in section 4;
(o) “member” means the member of the Governing Council and includes the Chairperson;
(p) “notification” means a notification in the Gazette of India or, as the case may be, the
Official Gazette of a State;
(q) “prescribed” means prescribed by rules made under this Act;
(r) “regulations” means regulations made by the Bureau under this Act;
(s) “schedule” means the Schedule of this Act;
(t) “State Commission” means the State Electricity Regulatory Commission established
under sub-section (l) of section 17 of the Electricity Regulatory Commissions Act, 1998;
(14 of 1998)

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 1. Energy Scenario

(u) words and expression used and not defined in this Act but defined in the Indian
Electricity Act, 1910 or the Electricity (Supply) Act, 1948 or the Electricity Regulatory
Commissions Act, 1998 shall have meanings respectively assigned to them in those
Acts. (9 of 1940, 54 of 1948,14 of 1998)

CHAPTER IV, SECTION 13

Powers and Functions of Bureau

(1) The Bureau shall, effectively co-ordinate with designated consumers, designated agencies
and other agencies, recognise and utilise the existing resources and infrastructure, in
performing the functions assigned to it by or under this Act
(2) The Bureau may perform such functions and exercise such powers as may be assigned to
it by or under this Act and in particular, such functions and powers include the function
and power to -
(a) recommend to the Central Government the norms for processes and energy
consumption standards required to be notified under clause (a) of section 14 ;
(b) recommend to the Central Government the particulars required to be displayed on
label on equipment or on appliances and manner of their display under clause (d) of
section 14;
(c) recommend to the Central Government for notifying any user or class of users of
energy as a designated consumer under clause (e) of section 14;
(d) take suitable steps to prescribe guidelines for energy conservation building codes
under clause (p) of section 14;
(e) take all measures necessary to create awareness and disseminate information for
efficient use of energy and its conservation;
(f) arrange and organize training of personnel and specialists in the techniques for
efficient use of energy and its conservation;
(g) strengthen consultancy services in the field of energy conservation;
(h) promote research and development in the field of energy conservation;
(i) develop testing and certification procedure and promote testing facilities for
certification and testing for energy consumption of equipment and appliances;
(j) formulate and facilitate implementation of pilot projects and demonstration projects
for promotion of efficient use of energy and its conservation;
(k) promote use of energy efficient processes, equipment, devices and systems;
(l) promote innovative financing of energy efficiency projects;
(m) give financial assistance to institutions for promoting efficient use of energy and its
conservation;
(n) levy fee, as may be determined by regulations, for services provided for promoting
efficient use of energy and its conservation;
(o) maintain a list of accredited energy auditors as may be specified by regulations;
(p) specify, by regulations, qualifications for the accredited energy auditors;

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 1. Energy Scenario

(q) specify, by regulations, the manner and intervals of time in which the energy audit
shall be conducted ;
(r) specify, by regulations, certification procedures for energy managers to be designated
or appointed by designated consumers;
(s) prepare educational curriculum on efficient use of energy and its conservation for
educational institutions, boards, universities or autonomous bodies and coordinate
with them for inclusion of such curriculum in their syllabus;
(t) implement international co-operation programmes relating to efficient use of energy
and its conservation as may be assigned to it by the Central Government;
(u) perform such other functions as may be prescribed.

CHAPTER V, SECTION 14
Power of Central Government to Facilitate and Enforce Efficient use of Energy and its
Conservation

The Central Government may, by notification, in consultation with the Bureau, —

(a) specify the norms for processes and energy consumption standards for any equipment,
appliances which consumes, generates, transmits or supplies energy;
(b) specify equipment or appliance or class of equipments or appliances, as the case may be, for
the purposes of this Act;
(c) prohibit manufacture or sale or purchase or import of equipment or appliance specified under
clause (b) unless such equipment or appliances conforms to energy consumption standards;
Provided that no notification prohibiting manufacture or sale or purchase or import or
equipment or appliance shall be issued within two years from the date of notification issued
under clause (a) of this section;
(d) direct display of such particulars on label on equipment or on appliance specified under
clause (b) and in such manner as may be specified by regulations;
(e) specify, having regarding to the intensity or quantity of energy consumed and the amount of
investment required for switching over to energy efficient equipments and capacity or
industry to invest in it and availability of the energy efficient machinery and equipment
required by the industry, any user or class of users of energy as a designated consumer for
the purposes of this Act;
(f) alter the list of Energy Intensive Industries specified in the Schedule;
(g) establish and prescribe such energy consumption norms and standards for designated
consumers as it may consider necessary:
Provided that the Central Government may prescribe different norms and standards for
different designated consumers having regard to such factors as may be prescribed;
(h) direct, having regard to quantity of energy consumed or the norms and standards of energy
consumption specified under clause (a) the energy intensive industries specified in the
Schedule to get energy audit conducted by an accredited energy auditor in such manner and
intervals of time as may be specified by regulations;

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 1. Energy Scenario

(i) direct, if considered necessary for efficient use of energy and its conservation, any
designated consumer to get energy audit conducted by an accredited energy auditor;
(j) specify the matters to be included for the purposes of inspection under sub-section (2) of
section 17;
(k) direct any designated consumer to furnish to the designated agency, in such form and
manner and within such period, as may be prescribed, the information with regard to the
energy consumed and action taken on the recommendation of the accredited energy
auditor;
(l) direct any designated consumer to designate or appoint energy manger in charge of
activities for efficient use of energy and its conservation and submit a report, in the form
and manner as may be prescribed, on the status of energy consumption at the end of the
every financial year to designated agency;
(m) prescribe minimum qualification for energy managers to be designated or appointed under
clause (l);
(n) direct every designated consumer to comply with energy consumption norms and
standards;
(o) direct any designated consumer, who does not fulfil the energy consumption norms and
standards prescribed under clause (g), to prepare a scheme for efficient use of energy and
its conservation and implement such scheme keeping in view of the economic viability of
the investment in such form and manner as may be prescribed;
(p) prescribe energy conservation building codes for efficient use of energy and its
conservation in the building or building complex;
(q) amend the energy conservation building codes to suit the regional and local climatic
conditions;
(r) direct every owner or occupier of the building or building complex, being a designated
consumer to comply with the provisions of energy conservation building codes for
efficient use of energy and its conservation;
(s) direct, any designated consumer referred to in clause (r), if considered necessary, for
efficient use of energy and its conservation in his building to get energy audit conducted in
respect of such building by an accredited energy auditor in such manner and intervals of
time as may be specified by regulations;
(t) take all measures necessary to create awareness and disseminate information for efficient
use of energy and its conservation;
(u) arrange and organise training of personnel and specialists in the techniques for efficient
use of energy and its conservation;
(v) take steps to encourage preferential treatment for use of energy efficient equipment or
appliances:
Provided that the powers under clauses (p) and (s) shall be exercised in consultation
with the concerned State.

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 1. Energy Scenario

CHAPTER VI, SECTION 15

Power Of State Government To Facilitate And Enforce Efficient Use Of Energy
And Its Conservation

The State Government may, by notification, in consultation with the Bureau -

(a) amend the energy conservation building codes to suit the regional and local climatic
conditions and may, by rules made by it, specify and notify energy conservation building
codes with respect to use of energy in the buildings;
(b) direct every owner or occupier of a building or building complex being a designated
consumer to comply with the provisions of the energy conservation building codes;
(c) direct, if considered necessary for efficient use of energy and its conservation, any
designated consumer referred to in clause (b) to get energy audit conducted by an
accredited energy auditor in such manner and at such intervals of time as may be
specified by regulations;
(d) designate any agency as designated agency to coordinate, regulate and enforce
provisions of this Act within the State;
(e) take all measures necessary to create awareness and disseminate information for
efficient use of energy and its conservation;
(f) arrange and organise training of personnel and specialists in the techniques for efficient
use of energy and its conservation;
(g) take steps to encourage preferential treatment for use of energy efficient equipment or
appliances;
(h) direct, any designated consumer to furnish to the designated agency, in such form and
manner and within such period as may be specified by rules made by it, information
with regard to the energy consumed by such consumer;
(i) specify the matters to be included for the purposes of inspection under sub-section (2)
of section 17;

(1) The State Government shall constitute a Fund to be called the State Energy
Conservation Fund for the purposes of promotion of efficient use of energy and its
conservation within the State.
(2) To the Fund shall be credited all grants and loans that may be made by the State
Government or, Central Government or any other organization or individual for the
purposes of this Act.
(3) The Fund shall be applied for meeting the expenses incurred for implementing the
provisions of this Act.
(4) The Fund created under sub-section (l) shall be administered by such persons or any
authority and in such manner as may be specified in the rules made by the State
Government.

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 1. Energy Scenario

(1) The designated agency may appoint, after the expiry of five years from the date of
commencement of this Act, as many inspecting officers as may be necessary for the
purpose of ensuring compliance with energy consumption standard specified under
clause (a) of section 14 or ensure display of particulars on label on equipment or
appliances specified under clause (b) of section 14 or for the purpose of performing
such other functions as may be assigned to them.
(2) Subject to any rules made under this Act, an inspecting officer shall have power to -
(a) inspect any operation carried on or in connection with the equipment or appliance
specified under clause (b) of section 14 or in respect of which energy standards under
clause (a) of section 14 have been specified;
(b) enter any place of designated consumer at which the energy is used for any activity and
may require any proprietor, employee, director, manager or secretary or any other
person who may be attending in any manner to or helping in, carrying on any activity
with the help of energy -
(i) to afford him necessary facility to inspect -
(A) any equipment or appliance as he may require and which may be available at such
place;
(B) any production process to ascertain the energy consumption norms and standards;
(ii) to make an inventory of stock of any equipment or appliance checked or verified
by him;
(iii) to record the statement of any person which may be useful for, or relevant to, for
efficient use of energy and its conservation under this Act.
(3) An inspecting officer may enter any place of designated consumer -
(a) where any activity with the help of energy is carried on; and
(b) where any equipment or appliance notified under clause (b) of section 14 has
been kept, during the hours at which such places is open for production or
conduct of business connected therewith.
(4) An inspecting officer acting under this section shall, on no account, remove or cause to be
removed from the place wherein he has entered, any equipment or appliance or books of
accounts or other documents.

The Central Government or the State Government may, in the exercise of its powers and
performance of its functions under this Act and for efficient use of energy and its conservation,
issue such directions in writing as it deems fit for the purposes of this Act to any person, officer,
authority or any designated consumer and such person, officer or authority or any designated
consumer shall be bound to comply with such directions.
Explanation – For the avoidance of doubts, it is hereby declared that the power to issue
directions under this section includes the power to direct –
(a) regulation of norms for process and energy consumption standards in any industry or
building or building complex; or
(b) regulation of the energy consumption standards for equipment and appliances.

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 1. Energy Scenario

CHAPTER VIII, SECTION 26

Penalties and Adjudication

(1) If any person fails to comply with the provision of clause (c) or the clause (d) or clause (h)
or clause (i) or clause (k) or clause (l) or clause (n) or clause (r) or clause (s) of section 14
or clause (b) or clause (c) or clause (h) of section 15, he shall be liable to a penalty which
shall not exceed ten thousand rupees for each such failures and, in the case of continuing
failures, with an additional penalty which may extend to one thousand rupees for every day
during which such failures continues:
Provided that no person shall be liable to pay penalty within five years from the date of
commencement of this Act.
(2) Any amount payable under this section, if not paid, may be recovered as if it were an arrear
of land revenue.

(1) For the purpose of adjudging section 26, the State Commission shall appoint any of its
members to be an adjudicating officer for holding an inquiry in such manner as may be
prescribed by the Central Government, after giving any person concerned a reasonable
opportunity of being heard for the purpose of imposing any penalty.
(2) While holding an inquiry the adjudicating officer shall have power to summon and enforce
the attendance of any person acquainted with the facts and circumstances of the case of give
evidence or produce any document which in the opinion of the adjudicating officer, may be
useful for or relevant to the subject-matter of the inquiry, and if, on such inquiry, he is
satisfied that the person has failed to comply with the provisions of any of the clauses of the
sections specified in section 26, he may impose such penalty as he thinks fit in accordance
with the provisions of any of those clauses of that section:

Provided that where a State Commission has not been established in a State, the Government
of that State shall appoint any of its officer not below the rank equivalent to a Secretary
dealing with legal affairs in that State to be an adjudicating officer for the purposes of this
section and such officer shall cease to be an adjudicating officer immediately on the
appointment of an adjudicating officer by the State Commission on its establishment in that
State:
Provided further that where an adjudicating officer appointed by a State Government ceased
to be an adjudicating officer, he shall transfer to the adjudicating officer appointed by the
State Commission all matters being adjudicated by him and thereafter the adjudicating
officer appointed by the State Commission shall adjudicate the penalties on such matters.

While adjudicating the quantum of penalty under section 26, the adjudicating officer shall have
due regard to the following factors, namely:-
(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a
result of the default;
(b) the repetitive nature of the default.

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No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter
which an adjudicating officer appointed under this Act or the Appellate Tribunal is empowered
by or under this Act to determine and no injunction shall be granted by any court or other
authority in respect of any action taken or to be taken in pursuance of any power conferred by or
under this Act.

CHAPTER IX, SECTION 30

Appellate Tribunal for Energy Conservation

The Central Government shall, by notification, establish an Appellate Tribunal to be known

as the Appellate Tribunal for Energy Conservation to hear appeals against the orders of the
adjudicating officer or the Central Government or the State Government or any other
authority under this Act

CHAPTER X,

Miscellaneous

SECTION 61

The provisions of this Act shall not apply to the Ministry or Department of the Central
Government dealing with Defence, Atomic Energy or such other similar Ministries or
Departments undertakings or Boards or institutions under the control of such Ministries or
Departments as may be notified by the Central Government.

THE SCHEDULE

[See section 2 (s)]

List of Energy Intensive Industries and other establishments specified

as designated consumers

1. Aluminium;
2. Fertilizers;
3. Iron and Steel;
4. Cement;
5. Pulp and paper;
6. Chlor Akali;
7. Sugar;
8. Textile;
9. Chemicals;
10. Railways;

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 1. Energy Scenario

11. Port Trust;

12. Transport Sector (industries and services);
13. Petrochemicals, Gas Crackers, Naphtha Crackers and Petroleum Refineries;
14. Thermal Power Stations, hydel power stations, electricity transmission companies
and distribution companies;
15. Commercial buildings or establishments;

Full version of this act may be obtained from www.bee-india.com

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 1. Energy Scenario

QUESTIONS

1. Define the following terms with three examples for each –

a) Primary and Secondary Energy.
b) Commercial and Non-commercial Energy.
c) Renewable and Non-renewable Energy
2. In terms of coal reserve India’s position in the world is
(a) 10th (b) 17th (c) 4th (d) 26th
3. The world oil reserves is expected to last another
(a) 300 years (b) 45 years (c) 600 years (d) forever
4. Of the total primary energy consumption in India coal accounts for
(a) 35% (b) 46% (c) 55% (d) 75%
5. List atleast five States where coal deposits are concentrated in India.

6. How much % of our Country’s oil consumption is imported and how much does
it cost (approximately) per year?
7. Name any three places of oil reserves located in India.

8. What is the hydro power generation potential available in India, and how much is
exploited so far.
9. What are the % shares of commercial energy consumption in industrial and
agricultural sectors?
10. How is economic growth linked to energy consumption?

11. What do you think of strategies required for long-term management of energy in
India?
12. Discuss the subsidies and cross subsidies in oil sector in India.

13. Write in few words about the various reforms in the energy sector.

14. Though Plant Respiration and Decomposition release more than ten times CO2
released by human activities, explain why CO2 is regarded as a potential threat to
the planet.
15. The contribution of CO2 to the green house gases is
(a) 23% (b) 95% (c) 54% (d) 0%
16. What are the implications of Global warming?

17. Describe the Greenhouse effect?

18. The excess of which gas in the atmosphere is the main cause for greenhouse
effect?

19. Name three greenhouse gases. Which one of them produces the maximum
greenhouse effect?

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 1. Energy Scenario

20. What are the major pollutants in burning fossil fuels?

21. Differentiate between energy conservation and energy efficiency.

22. What are the benefits for industry through implementing energy efficiency
programme?
23. Why energy conservation is important in the prevailing energy scenario?

24. The energy conservation act requires that all designated energy consumers
should get energy audits conducted by
(a) energy manager (b) accredited energy auditor (c) managing director (d)
chartered accountant

25. Name five designated consumers under the energy conservation act.

26. Name any three main provisions of the EC act, 2001 as applicable to the
designated consumers.

27. List the incorrect statement and correct the same.

The Energy Conservation Act, 2001 requires that
a) designated consumer to furnish to the designated agency, in such form and
manner and within such period as may be prescribed the information with
regard to the energy purchased and action taken on the recommendation
of energy auditor.
b) direct, if consider necessary, for efficient use of energy and its
conservation, to get energy audit conducted by a certified energy auditor.

REFERENCES

1. Encyclopedia of Energy – McGraw Hill Publication

2. Handbook of Energy Engineering , The Fairmont Press Inc – Albert Thumann
3. Energy Handbook, Von Nostrand Reinhold Company - Robert L. Loftness
4. Cleaner Production – Energy Efficiency Manual for GERIAP, UNEP, Bangkok
prepared by National Productivity Council
5. Statistics have been drawn from BP Statistical Review of World Energy, June 2003,
International Energy Outlook, March 2002, Energy Information administration,
Office of integrated analysis and forecasting, US department of energy, Washington
6. Planning commission statistics
7. The Energy and Resources Institute (TERI)

www.bp.com/centres/energy
www.eia.doe.gov
www.epa.org

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