Energy Conservation Amendment Bill 2022

On 3rd August 2022, the Energy Conservation (Amendment) Bill 2022 was introduced in the Lok Sabha. Key amendments have been proposed to be made to the Energy Conservation Act 2001. 

With growing population in the country, energy consumption has increased tremendously. This put severe pressure on natural resources, in particular, on renewable energy resources. Hence the Energy Conservation Act was enacted 2001 was enacted with the objective of encouraging efficient and effective use and conservation of the country’s energy resources. Thereafter, it was amended in 2010. The latest amendments proposed in the Bill 2022 seek to regulate energy consumption by industries, commercial buildings.

A look at the highlights of the proposed amendments:

  1. Designated consumers: The amendment seeks to define designated consumers of energy to include (i) industries such as mining, steel, cement, textile, chemicals, and petrochemicals, (ii) transport sector including railways, and (iii) commercial buildings and residential buildings as specified in the schedule of the Act / Amendments.
  2. Energy Consumption Standards: The Central government shall be empowered to lay down energy consumption standards.
  3. Carbon trading: Carbon credit means a limit or tradable permit to produce a specified amount of carbon emissions. The Central government shall be empowered to specify a carbon credit trading scheme. It is also proposed to issue carbon credit certificates to entities registered and compliant with the carbon credit trading scheme.
  4. Use of Non fossil fuels: The government may require the designated consumers to meet a minimum share of energy consumption from non fossil fuels. It is proposed to levy penalty of up to Rs. 10 lakhs for failure to meet obligation of use of energy from non -fossil sources. An additional penalty of up to twice the price of oil equivalent of energy consumed above the prescribed norms.
  5. Energy Conservation Code: ‘Energy consumption and sustainable building code’ shall be specified by the government for buildings. Such standards shall depend on the area. Such code shall provide for efficient energy conservation, use of renewable energy and other requirement for green buildings. Hitherto, under the Act 2001 it was applicable only to commercial buildings which satisfied certain criteria such as (i) those erected after notification of the Code, (ii) with a minimum connected load of 100 kilo watts or contract load of 120 kilo volt ampere. The Bill 2022 proposes to make the Energy code applicable to office and residential buildings as well.
  6. Widening the ambit of applicability of the Act: The Energy consumption standards under the Act were applicable to equipment and appliances which consume, generate, transmit or supply energy. The Bill 2022 proposes to widen the ambit of applicability to include vehicles as specified under Motor Vehicles Act and Vessels such as ships and boats. Failure to comply shall attract penalty up to Rs. 10 lakhs.
  7. Regulatory bodies:  The Bill 2022 has proposed amendments to the number of members constituting the Bureau of Energy Efficiency with the objective of ensuring optimum representation from the governments as well as industries and consumers. State Electricity Regulatory Commissions have been given additional powers in discharging their functions.   

An Act towards a greener world

The objective of the amendments is aimed to increased use of renewable energy and non fossil fuels. Heavy penalties have been proposed for non- compliance by entities causing pollution of all kinds. India is a signatory to the Paris Agreement on climate change in 2016.  The government is keen on taking putting place, strict measures to tackle climate change and global warming. Each nation is required to submit a Nationally Determined Contributions (NDCs) containing all measures of climate actions that it proposes to undertake. The amendments proposed in the Bill 2022 is a direct outcome of India’s commitment under the Paris agreement and in general towards mitigating adverse effects of climate change. 


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