ENERGY SCENARIO

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:

• Primary and Secondary energy

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

Primary and Secondary Energy

Primary energy sources are
those that are either found or
stored in nature. Common pri-
mary energy sources are coal,
oil, natural gas, and biomass
(such as wood). Other primary
energy sources available
include nuclear energy from
radioactive substances, thermal
energy stored in earth's interi-
or, and potential energy due to
earth's gravity. The major pri-
mary and secondary energy
sources are shown in Figure
1Primary energy sources are
mostly converted in industrial
utilities into secondary energy
sources; for example coal, oil
Figure 1 Major Primary and Secondary Sources
or gas converted into steam
and electricity. Primary energy can also be used directly. Some energy sources have non-ener-
gy uses, for example coal or natural gas can be used as a feedstock in fertiliser plants.

Commercial Energy and Non Commercial Energy

Commercial Energy
The energy sources that are available in the market for a definite price are known as commer-
cial 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.

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 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.

Figure 2 Renewable and Non-Renewable Energy

Global Primary Energy Reserves*
Coal
The proven global coal reserve was estimated to be 9,84,453 million
tonnes by end of 2003. 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 1147 billion barrels by the end of 2003. Saudi
Arabia had the largest share of the reserve with almost 23%.
(One barrel of oil is approximately 160 litres)

Gas
The global proven gas reserve was estimated to be 176 trillion cubic metres
by the end of 2003. The Russian Federation had the largest share of the
reserve with almost 27%.
(*Source: BP Statistical Review of World Energy, June 2004)

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

Global Primary Energy Consumption

The global primary energy consumption at the end of 2003 was equivalent to 9741 million
tonnes of oil equivalent (Mtoe). The Figure 3 shows in what proportions the sources men-
tioned above contributed to this global figure.

Figure 3 Global Primary Energy Consumption

The primary energy consumption for few of the developed and developing countries are 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, 1.3, 1.5 times that of Canada, France
and U.K respectively.

TABLE 1.1 PRIMARY ENERGY CONSUMPTION BY FUEL, 2003

In Million tonnes oil equivalent

Oil Natural Coal Nuclear Hydro Total
Country Gas Energy electric
USA 914.3 566.8 573.9 181.9 60.9 2297.8
Canada 96.4 78.7 31.0 16.8 68.6 291.4
France 94.2 39.4 12.4 99.8 14.8 260.6
Russian Federation 124.7 365.2 111.3 34.0 35.6 670.8
United Kingdom 76.8 85.7 39.1 20.1 1.3 223.2
China 275.2 29.5 799.7 9.8 64.0 1178.3
India 113.3 27.1 185.3 4.1 15.6 345.3
Japan 248.7 68.9 112.2 52.2 22.8 504.8
Malaysia 23.9 25.6 3.2 - 1.7 54.4
Pakistan 17.0 19.0 2.7 0.4 5.6 44.8
Singapore 34.1 4.8 - - - 38.9
TOTAL WORLD 3636.6 2331.9 2578.4 598.8 595.4 9741.1

Energy Distribution Between Developed and Developing Countries

Although 80 percent of the world's popula-
tion lies in the developing countries (a four-
fold population increase in the past 25 years),
their energy consumption amounts to only 40
percent of the world total energy consump-
tion. The high standards of living in the
developed countries are attributable to high-
energy consumption levels. Also, the rapid
population growth in the developing coun-
Figure 4: Energy Distribution Between D eveloped
tries has kept the per capita energy consump- and Developing Countries
tion low compared with that of highly indus-
trialized developed 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.
Indian Energy Scenario
Coal dominates the energy mix in India, contributing to 55% of the total primary energy pro-
duction. Over the years, there has been a marked increase in the share of natural gas in prima-
ry 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 2003). This amounts to almost 8.6% of the world reserves and it may last for about
230 years at the current Reserve to Production (R/P) ratio. In contrast, the world's proven coal
reserves are expected to last only for 192 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 con-
centrated in these states (Andhra Pradesh, Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra,
Orissa, Jharkhand, West Bengal).

Oil Supply
Oil accounts for about 36 % of India's
total energy consumption. India today
is one of the top ten oil-guzzling
nations in the world and will soon
overtake Korea as the third largest
consumer of oil in Asia after China
and Japan. The country's annual crude
oil production is peaked at about 32
million tonne as against the current
peak demand of about 110 million
tonne. In the current scenario, India's
oil consumption by end of 2007 is
expected to reach 136 million
tonne(MT), of which domestic production will be only 34 MT. India will have to pay an oil bill
of roughly $50 billion, assuming a weighted average price of $50 per barrel of crude. In 2003-
04, against total export of $64 billion, oil imports accounted for $21 billion. India imports 70%
of its crude needs mainly from gulf nations. The majority of India's roughly 5.4 billion barrels
in oil reserves are located in the Bombay High, upper Assam, Cambay, Krishna-Godavari. In
terms of sector wise petroleum product consumption, transport accounts for 42% followed by
domestic and industry with 24% and 24% respectively. India spent more than Rs.1,10,000 crore
on oil imports at the end of 2004.
Natural Gas Supply
Natural gas accounts for about 8.9 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 sta-
tions under utilities was 1,12,581 MW as on 31st May 2004,
consisting of 28,860 MW- hydro, 77,931 MW - thermal and
2,720 MW- nuclear and 1,869 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 2.4 per cent of electricity
generated in India. India has ten nuclear power reactors at five nuclear power stations produc-
ing 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 May 2004. It is assessed that
exploitable potential at 60% load factor is 84,000 MW.

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

TABLE 1 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 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)

Energy Needs of Growing Economy Figure 5 Sector Wise Energy

Consumption (1999-2000)
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, 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. The 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 are much higher.

India's Energy Needs

The plan outlay vis-à-vis share of energy is given in Figure 6. As seen from the Figure, 18.0%
of the total five-year plan outlay is spent on the energy sector.

PLANWISE OUTLAY

Figure 6 Expenditure Towards Energy Sector

Per Capita Energy Consumption

The per capita energy consumption (see Figure 7) is too low for India as compared to devel-
oped countries. It is just 4% of USA and 20% of the world average. The per capita consump-
tion is likely to grow in India with growth in economy thus increasing the energy demand.
 Figure 7 Per Capita Energy Consumption

Energy Intensity
Energy intensity is energy consumption per unit of GDP. Energy intensity indicates the devel-
opment 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.

Long Term Energy Scenario for India

Coal
Coal is the predominant energy source for power production in India, generating approximate-
ly 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 dur-
ing 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 have 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 and as such
requires to be beneficiated to improve the quality; Coal imports will also need to increase dra-
matically 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 peri-
od. 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). India's self suf-
ficiency in oil has consistently declined from 60% in the 50s to 30% currently. Same is expect-
ed to go down to 8% by 2020. As shown in
the figure 1.8, around 92% of India's total
oil demand by 2020 has to be met by
imports.
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. Figure 8 India's Oil Balance

Electricity
India currently has a 142700
160000
peak demand shortage
140000
of around 14% and an
120000
energy deficit of 8.4%.
100000
Keeping this in view 80000
and to maintain a GDP 60000
(gross domestic prod- 40000
700 97.7 3522.5
uct) growth of 8% to 20000

10%, the Government 0

Proved Reserve Gonsumption
of India has very pru-
India 700 97.7
dently set a target of Wor1d 142700 3522.5
215,804 MW power
generation capacity by Figure 9 Proven Oil Reserve/Consumption (in Million Tonnes)
March 2012 from the India Vs World (At End 2002)
level of 100,010 MW as
on March 2001, that is a capacity addition of 115,794 MW in the next 11 years (Table 3).
In the area of nuclear power the objective is to achieve 20,000 MW of nuclear generation capac-
ity by the year 2020.

TABLE 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
March 2001 61,157 Diesel: 864 2720 25,116 100,010
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%)
Energy Pricing in India
Price of energy does not reflect true cost to society. The basic assumption underlying efficien-
cy of market place does not hold in our economy, since energy prices are undervalued and ener-
gy wastages are not taken seriously. Pricing practices in India like many other developing coun-
tries 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 high-
er 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 interna-
tional prices. The most important achievement has been the linking of diesel prices to interna-
tional 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 result-
ed in serious distortions in prices, as they do not reflect economic costs 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 con-
sumers are charged based on both demand (kVA) and energy (kWh), the low-tension (LT) con-
sumer 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 with-
in 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 State Electricity Boards have additional recov-
ery 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 adjust-
ment mechanism, even when some 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.
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 essen-
tially in the hands of the government for several decades. It is now been realized that if sub-
stance 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 infra-
structure 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 indus-
try. One of the key reforms is that the government has allowed importing of coal to meet our
requirements. Private sector has been allowed to extract coal for captive use only. Further
reforms are contemplated for which the Coal Mines Nationalization Act needs to be amended
for which the Bill is awaiting approval of the Parliament.
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 tech-
nological 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 pro-
mote 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.

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. There are plans to link all SEB grids and form a unified national
power grid.

Electricity Act, 2003

The government has enacted Electricity Act, 2003 which seeks to bring about a qualitative
transformation of the electricity sector. The Act seeks to create liberal framework of develop-
ment for the power sector by distancing Government from regulation. It replaces the three exist-
ing 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 consoli-
date 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, ratio-
nalization 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 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)
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 indepen-
dent 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.
Energy and Environment
The usage of energy resources in industry
leads to environmental damages by polluting
the atmosphere. Few of examples of air pollu-
tion are sulphur dioxide (SO2), nitrous oxide
(NOX) and carbon monoxide (CO) emissions
from boilers and furnaces, chloro-fluro car-
bons (CFC) emissions from refrigerants use,
etc. In chemical and fertilizers industries,
toxic gases are released. Cement plants and
power plants spew out particulate matter.
Typical inputs, outputs, and emissions for a
typical industrial process are shown in Figure Figure 10 Inputs & Outputs of Process
10.

Air Pollution
A variety of air pollutants have known or suspected harmful effects on human health and the
environment. These air pollutants are basically the products of combustion from fossil fuel use.
Air pollutants from these sources may not only create problems near to these sources but also
can cause problems far away. Air pollutants can travel long distances, chemically react in the
atmosphere to produce secondary pollutants such as acid rain or ozone.

Evolutionary Trends in Pollution Problems

In both developed and rapidly industrialising countries, the major historic air pollution
problem has typically been high levels of smoke and SO2 arising from the combustion of sul-
phur-containing fossil fuels such as coal for domestic and industrial purposes.
Smogs resulting from the combined effects of black smoke, sulphate / acid aerosol and fog
have been seen in European cities until few decades ago and still occur in many cities in devel-
oping world. In developed countries, this problem has significantly reduced over recent decades
as a result of changing fuel-use patterns; the increasing use of cleaner fuels such as natural gas,
and the implementation of effective smoke and emission control policies.
In both developed and developing countries, the major threat to clean air is now posed by
traffic emissions. Petrol- and diesel-engined motor vehicles emit a wide variety of pollutants,
principally carbon monoxide (CO), oxides of nitrogen (NOx), volatile organic compounds
(VOCs) and particulates, which have an increasing impact on urban air quality.
In addition, photochemical reactions resulting from the action of sunlight on NO2 and VOCs
from vehicles leads to the formation of ozone, a secondary long-range pollutant, which impacts
in rural areas often far from the original emission site. Acid rain is another long-range pollutant
influenced by vehicle NOx emissions.
Industrial and domestic pollutant sources, together with their impact on air quality, tend to
be steady-state or improving over time. However, traffic pollution problems are worsening
world-wide. The problem may be particularly severe in developing countries with dramatically
increasing vehicle population, infrastructural limitations, poor engine/emission control tech-
nologies and limited provision for maintenance or vehicle regulation.
 The principle pollutants produced by industrial, domestic and traffic sources are sulphur
dioxide, nitrogen oxides, particulate matter, carbon monoxide, ozone, hydrocarbons, benzene,
1,3-butadiene, toxic organic micropollutants, lead and heavy metals.
Brief introduction to the principal pollutants are as follows:
Sulphur dioxide is a corrosive acid gas, which combines with water
vapour in the atmosphere to produce acid rain. Both wet and dry deposi-
tion have been implicated in the damage and destruction of vegetation
and in the degradation of soils, building materials and watercourses. SO2
in ambient air is also associated with asthma and chronic bronchitis. The
principal source of this gas is power stations and industries burning fos-
sil fuels, which contain sulphur.

Nitrogen oxides are formed during high temperature combustion

processes from the oxidation of nitrogen in the air or fuel. The principal
source of nitrogen oxides - nitric oxide (NO) and nitrogen dioxide (NO2),
collectively known as NOx - is road traffic. NO and NO2 concentrations
are greatest in urban areas where traffic is heaviest. Other important
sources are power stations and industrial processes.
Nitrogen oxides are released into the atmosphere mainly in the form
of NO, which is then readily oxidised to NO2 by reaction with ozone.
Elevated levels of NOx occur in urban environments under stable meteorological conditions,
when the air mass is unable to disperse.
Nitrogen dioxide has a variety of environmental and health impacts. It irritates the respira-
tory system and may worsen asthma and increase susceptibility to infections. In the presence of
sunlight, it reacts with hydrocarbons to produce photochemical pollutants such as ozone.
Nitrogen oxides combine with water vapour to form nitric acid. This nitric acid is in turn
removed from the atmosphere by direct deposition to the ground, or transfer to aqueous droplets
(e.g. cloud or rainwater), thereby contributing to acid deposition.

Acidification from SO2 and NOx

Acidification of water bodies and soils, and the consequent impact on agriculture, forestry and
fisheries are the result of the re-deposition of acidifying compounds resulting principally from
the oxidation of primary SO2 and NO2 emissions from fossil fuel combustion. Deposition may
be by either wet or dry processes, and acid deposition studies often need to examine both of
these acidification routes.
Airborne particulate matter varies widely in its physical and chem-
ical composition, source and particle size. PM10 particles (the fraction of
particulates in air of very small size (<10 µm)) are of major current con-
cern, as they are small enough to penetrate deep into the lungs and so
potentially pose significant health risks. In addition, they may carry sur-
face-absorbed carcinogenic compounds into the lungs. Larger particles,
meanwhile, are not readily inhaled, and are removed relatively efficient-
ly from the air by settling.
A major source of fine primary particles are combustion processes, in particular diesel com-
bustion, where transport of hot exhaust vapour into a cooler exhaust pipe can lead to sponta-
neous nucleation of "carbon" particles before emission. Secondary particles are typically
formed when low volatility products are generated in the atmosphere, for example the oxida-
tion of sulphur dioxide to sulphuric acid. The atmospheric lifetime of particulate matter is
strongly related to particle size, but may be as long as 10 days for particles of about 1mm in
diameter.
Concern about the potential health impacts of PM10 has increased very rapidly over recent
years. Increasingly, attention has been turning towards monitoring of the smaller particle frac-
tion PM2.5 capable of penetrating deepest into the lungs, or to even smaller size fractions or total
particle numbers.

Carbon monoxide (CO) is a toxic gas, which is emitted into the

atmosphere as a result of combustion processes, and from oxidation of
hydrocarbons and other organic compounds. In urban areas, CO is pro-
duced almost entirely (90%) from road traffic emissions. CO at levels
found in ambient air may reduce the oxygen-carrying capacity of the
blood. It survives in the atmosphere for a period of approximately 1
month and finally gets oxidised to carbon dioxide (CO2).

Ground-level ozone (O3), unlike other primary pollutants mentioned

above, is not emitted directly into the atmosphere, but is a secondary pol-
lutant produced by reaction between nitrogen dioxide (NO2), hydrocar-
bons and sunlight. Ozone can irritate the eyes and air passages causing
breathing difficulties and may increase susceptibility to infection. It is a
highly reactive chemical, capable of attacking surfaces, fabrics and rub-
ber materials. Ozone is also toxic to some crops, vegetation and trees.
Whereas nitrogen dioxide (NO2) participates in the formation of
ozone, nitrogen oxide (NO) destroys ozone to form oxygen (O2) and nitrogen dioxide (NO2).
For this reason, ozone levels are not as high in urban areas (where high levels of NO are emit-
ted from vehicles) as in rural areas. As the nitrogen oxides and hydrocarbons are transported out
of urban areas, the ozone-destroying NO is oxidised to NO2, which participates in ozone for-
mation.

Hydrocarbons
There are two main groups of hydrocarbons of concern: volatile organic compounds (VOCs)
and polycyclic aromatic hydrocarbons (PAHs). VOCs are released in vehicle exhaust gases
either as unburned fuels or as combustion products, and are also emitted by the evaporation of
solvents and motor fuels. Benzene and 1,3-butadiene are of particular concern, as they are
known carcinogens. Other VOCs are important because of the role they
play in the photochemical formation of ozone in the atmosphere.
Benzene is an aromatic VOC, which is a minor constituent of petrol
(about 2% by volume). The main sources of benzene in the atmosphere
are the distribution and combustion of petrol. Of these, combustion by
petrol vehicles is the single biggest source (70% of total emissions)
whilst the refining, distribution and evaporation of petrol from vehicles accounts for approxi-
mately a further 10% of total emissions. Benzene is emitted in vehicle exhaust not only as
unburnt fuel but also as a product of the decomposition of other aromatic compounds. Benzene
is a known human carcinogen.
1,3-butadiene, like benzene, is a VOC emitted into the atmosphere
principally from fuel combustion of petrol and diesel vehicles. Unlike ben-
zene, however, it is not a constituent of the fuel but is produced by the com-
bustion of olefins. 1,3-butadiene is also an important chemical in certain
industrial processes, particularly the manufacture of synthetic rubber. It is
handled in bulk at a small number of industrial locations. Other than in the

vicinity of such locations, the dominant source of 1,3-butadiene in the atmosphere are the motor
vehicles. 1,3 Butadiene is also a known, potent, human carcinogen.
TOMPs (Toxic Organic Micropollutants) are produced by the incomplete
combustion of fuels. They comprise a complex range of chemicals some of
which, although they are emitted in very small quantities, are highly toxic
or and carcinogenic. Compounds in this category include:
· PAHs (PolyAromatic Hydrocarbons)
· PCBs (PolyChlorinated Biphenyls)
· Dioxins
· Furans

Heavy Metals and Lead

Particulate metals in air result from activities such as fossil fuel com-
bustion (including vehicles), metal processing industries and waste inciner-
ation. There are currently no emission standards for metals other than lead.
Lead is a cumulative poison to the central nervous system, particularly
detrimental to the mental development of children.
Lead is the most widely used non-ferrous metal and has a large number
of industrial applications. Its single largest industrial use worldwide is in the manufacture of
batteries and it is also used in paints, glazes, alloys, radiation shielding, tank lining and piping.
As tetraethyl lead, it has been used for many years as an additive in petrol; with the increas-
ing use of unleaded petrol, however, emissions and concentrations in air have reduced steadily
in recent years.

Climatic Change
Human activities, particularly the combustion of fossil fuels, have made the blanket of green-
house gases (water vapour, carbon dioxide, methane, ozone etc.) around the earth thicker. The
resulting increase in global temperature is altering the complex web of systems that allow life
to thrive on earth such as rainfall, wind patterns, ocean currents and distribution of plant and
animal species.

Greenhouse Effect and the Carbon Cycle

Life on earth is made possible by energy from the sun, which arrives mainly in the form of vis-
 Figure 11 The Greenhouse Effect

ible light. About 30 percent of the sunlight is scattered back into space by outer atmosphere and
the balance 70 percent reaches the earth's surface, which reflects it in form of infrared radiation.
The escape of slow moving infrared radiation is delayed by the green house gases. A thicker
blanket of greenhouse gases traps more infrared radiation and increase the earth's temperature
(Refer Figure 11).
Greenhouse gases makeup only 1 percent of the atmosphere, but they act as a blanket
around the earth, or like a glass roof of a greenhouse and keep the earth 30 degrees warmer than
it would be otherwise - without greenhouse gases, earth would be too cold to live. Human activ-
ities that are responsible for making the greenhouse layer thicker are emissions of carbon diox-
ide from the combustion of coal, oil and natural gas; by additional methane and nitrous oxide
from farming activities and changes in land use; and by several man made gases that have a
long life in the atmosphere.
The increase in greenhouse gases is happening at an alarming rate. If greenhouse gases emis-
sions continue to grow at current rates, it is almost certain that the atmospheric levels of carbon
dioxide will increase twice or thrice from pre-industrial levels during the 21st century.
Even a small increase in earth's temperature will be accompanied by changes in climate-
such as cloud cover, precipitation, wind patterns and duration of seasons. In an already highly
crowded and stressed earth, millions of people depend on weather patterns, such as monsoon
rains, to continue as they have in the past. Even minimum changes will be disruptive and diffi-
cult.
Carbon dioxide is responsible for 60 percent of the "enhanced greenhouse effect". Humans
are burning coal, oil and natural gas at a rate that is much faster than the rate at which these fos-
sil fuels were created. This is releasing the carbon stored in the fuels into the atmosphere and
upsetting the carbon cycle (a precise balanced system by which carbon is exchanged between
the air, the oceans and land vegetation taking place over millions of years). Currently, carbon
dioxide levels in the atmospheric are rising by over 10 percent every 20 years.

Current Evidence of Climatic Change

Cyclones, storm, hurricanes are occurring more frequently and floods and draughts are more
intense than before. This increase in extreme weather events cannot be explained away as ran-
dom events.
This trend toward more powerful storms and hotter, longer dry periods is predicted by com-
puter models. Warmer temperatures mean greater evaporation, and a warmer atmosphere is able
to hold more moisture and hence there is more water aloft that can fall as precipitation.
Similarly, dry regions are prone to lose still more moisture if the weather is hotter and hence
this leads to more severe droughts and desertification.

Future Effects
Even the minimum predicted shifts in climate for the 21st century are likely to be significant
and disruptive. Predictions of future climatic changes are wide-ranging. The global tempera-
ture may climb from 1.4 to 5.8 degrees C; the sea level may rise from 9 to 88 cm. Thus, increas-
es in sea level this century are expected to range from significant to catastrophic. This uncer-
tainty reflects the complexity, interrelatedness, and sensitivity of the natural systems that make
up the climate.

Severe Storms and Flooding

The minimum warming forecast for the next 100 years is more than twice the 0.6 degree C
increase that has occurred since 1900 and that earlier increase is already having marked conse-
quences. Extreme weather events, as predicted by computer models, are striking more often and
can be expected to intensify and become still more frequent. A future of more severe storms and
floods along the world's increasingly crowded coastlines is likely.

Food Shortages
Although regional and local effects may differ widely, a general reduction is expected in poten-
tial crop yields in most tropical and sub-tropical regions. Mid-continental areas such as the
United States' "grain belt" and vast areas of Asia are likely to become dry. Sub-Saharan Africa
where dryland agriculture relies solely on rain, the yields would decrease dramatically even
with minimum increase in temperature. Such changes could cause disruptions in food supply in
a world is already afflicted with food shortages and famines.

Dwindling Freshwater supply

Salt-water intrusion from rising sea levels will reduce the quality and quantity of freshwater
supplies. This is a major concern, since billions of people on earth already lack access to fresh-
water. Higher ocean levels already are contaminating underground water sources in many parts
of the world.

Loss of Biodiversity
Most of the world's endangered species (some 25 per cent of mammals and 12 per cent of birds)
may become extinct over the next few decades as warmer conditions alter the forests, wetlands,
and rangelands they depend on, and human development blocks them from migrating else-
where.

Increased Diseases
Higher temperatures are expected to expand the range of some dangerous "vector-borne" dis-
eases, such as malaria, which already kills 1 million people annually, most of them children.

A World Under Stress

Ongoing environmentally damaging activities such as overgrazing, deforestation, and denuded
agricultural soils means that nature will be more vulnerable than previously to changes in cli-
mate.
Similarly, the world's vast human population, much of it poor, is vulnerable to climate
stress. Millions live in dangerous places such as floodplains or in slums around the big cities of
the developing world. Often there is nowhere else for population to move. In the distant past,
man and his ancestors migrated in response to changes in habitat. There will be much less room
for migration in future.
Global warming almost certainly will be unfair. The industrialized countries of North
America and Western Europe, and other countries such as Japan, are responsible for the vast
amount of past and current greenhouse-gas emissions. These emissions are incurred for the high
standards of living enjoyed by the people in those countries.
Yet those to suffer most from climate change will be in the developing world. They have
fewer resources for coping with storms, with floods, with droughts, with disease outbreaks, and
with disruptions to food and water supplies. They are eager for economic development them-
selves, but may find that this already difficult process has become more difficult because of cli-
mate change. The poorer nations of the world have done almost nothing to cause global warm-
ing yet is most exposed to its effects.

Acid Rain
Acid rain is caused by release of SOX and NOX from combustion of fossil fuels, which then mix

Figure 12
with water vapour in atmosphere to form sulphuric and nitric acids respectively (Refer Figure
12).
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)

Energy Security
The basic aim of energy security for a nation is to reduce its dependency on the imported ener-
gy sources for its economic growth.
India will continue to experience an energy supply shortfall throughout the forecast period.
This gap has widened 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 respective-
ly during the period 1991-99. The 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. The imports
of gas and LNG (liquefied natural gas) are likely to increase 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 neces-
sitates measures to be taken to reduce the oil dependence of the economy, possibly through fis-
cal 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
• Building stockpiles
• Diversification of energy supply sources
• Increased capacity of fuel switching
• Demand restraint,
• Development of renewable energy sources.
• Energy efficiency
• Sustainable development
Although all these options are feasible, their implementation will take time. Also, for coun-
tries 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 stock-
pile.
However, out of all these options, the simplest and the most easily attainable is reducing
demand through persistent energy conservation efforts.

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 Figure 1.13
consumption and will not exist for future generations
(see Figure 13).

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 produc-
tion or consumption is reduced without affecting output,
consumption or comfort levels. Promotion of energy effi-
ciency will contribute to energy conservation and is there-
fore an integral part of energy conservation promotional Figure 14
policies.
Energy efficiency is often viewed as a resource option like coal, oil or natural gas. It pro-
vides 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 by the same
amount (refer Figure 14).
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 same function.
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
 Figure 15
benefits of Energy conservation for various players are given in Figure 15.

Energy Strategy for the Future

The energy strategy for the future could be classified into immediate, medium-term 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.

Medium-term strategy:
• Demand management through greater conservation of energy, optimum fuel mix, structur-
al changes in the economy, an appropriate model 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 dif-
ferent 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 mea-
sures 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:
➢ Efficient generation of energy resources
• Efficient production of coal, oil and natural gas
• Reduction of natural gas flaring

➢ 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.

➢ Enhancing energy efficiency

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

➢ 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.
➢ Investment legislation to attract foreign investments.
• Streamlining approval process for attracting private sector participation in power gener-
ation, transmission and distribution .

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 effec-
tively 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 coor-
dination 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 equip-
ment 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 equip-
ment and appliances.
• Prohibit manufacture, sale and import of such equipment, which does not conform to the
standards.
• Introduce a mandatory labeling scheme for notified equipment appliances to enable con-
sumers 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 ener-
gy intensive industries, Railways, Port Trust, Transport Sector, Power Stations,
Transmission & Distribution Companies and Commercial buildings or establishments;
• The designated consumer to get an energy audit conducted by an accredited energy audi-
tor;
• Energy managers with prescribed qualification are required to be appointed or designat-
ed 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 train-
ing 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 intend-
ed to be used for commercial purposes;
• Energy audit of specific designated commercial building consumers would also be pre-
scribed.

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 demon-
stration in order to boost market penetration of efficient equipment and appliances. It
would support the creation of facilities for testing and development and to promote con-
sumer awareness.

Bureau of Energy Efficiency (BEE):

• The mission of Bureau of Energy Efficiency is to institutionalize energy efficiency ser-
vices, enable delivery mechanisms in the country and provide leadership to energy effi-
ciency in all sectors of economy. The primary objective would be to reduce energy inten-
sity 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-offi-
cio 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 ener-
gy 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 develop-
ment of Energy service companies (ESCOs), transforming the market for energy effi-
ciency 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 ini-
tial 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 cli-
matic condition, to designate state level agency to coordinate, regulate and enforce pro-
visions 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-regula-
tion 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, manufacturer's 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 manufactur-
er 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;
(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 sec-
tion 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 commer-
cial purposes;
(d) "Bureau" means the Bureau of Energy Efficiency established under subsection (l) of sec-
tion 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 mate-
 rials, hydro-electricity and includes electrical energy or electricity generated from renew-
able 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 effi-
ciency with cost benefit analysis and an action plan to reduce energy consumption;
(j) "energy conservation building codes" means the norms and standards of energy consump-
tion 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)
(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 per-
forming 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 ener-
gy 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 effi-
cient 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 con-
servation;
(n) levy fee, as may be determined by regulations, for services provided for promoting effi-
cient 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;
(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 edu-
cational 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 con-
sumers as it may consider necessary: Provided that the Central Government may pre-
scribe 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 ener-
gy 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;
(i) direct, if considered necessary for efficient use of energy and its conservation, any desig-
nated 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 man-
ner and within such period, as may be prescribed, the information with regard to the ener-
gy 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 activ-
ities 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 stan-
dards;
(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 conserva-
tion in the building or building complex;
(q) amend the energy conservation building codes to suit the regional and local climatic con-
ditions;
(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 effi-
cient 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 con-
sultation with the concerned State.

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 con-
ditions 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 con-
sumer 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 desig-
nated 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 regu-
lations;
(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 man-
ner 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 pur-
poses of this Act.
(3) The Fund shall be applied for meeting the expenses incurred for implementing the provi-
sions 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.
(1) The designated agency may appoint, after the expiry of five years from the date of com-
mencement 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 sec-
tion 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 speci-
fied 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 con-
nected 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 per-
formance 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, offi-
cer, authority or any designated consumer and such person, officer or authority or any desig-
nated 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 build-
ing or building complex; or
(b) regulation of the energy consumption standards for equipment and appliances.
 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 con-
tinuing 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 pre-
scribed by the Central Government, after giving any person concerned a reasonable oppor-
tunity 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 pro-
duce 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 spec-
ified in section 26, he may impose such penalty as he thinks fit in accordance with the pro-
visions 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 pur-
poses of this section and such officer shall cease to be an adjudicating officer immediate-
ly on the appointment of an adjudicating officer by the State Commission on its establish-
ment 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 offi-
cer 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.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 adju-
dicating 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;
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;