The proposed Perform Achieve and Trade (PAT) scheme in India: A policy evaluation

University essay from Lunds universitet/Internationella miljöinstitutet

Abstract: Perform, Achieve and Trade (PAT) scheme, proposed in 2008,is the first of its kind energy efficiency trading scheme in India. PAT aims for improving the energy efficiency in the eight most energy intensive large scale industrial sectors, covering almost 54% of the total energy consumption in India, through certification of energy savings which can be traded. This thesis seeks to provide an early insight into the design and functionality of PAT and its potential impact on the targeted energy intensive industries through an ex-ante evaluation. , It focuses on two of the eight sectors covered under the PAT scheme, namely, thermal power and iron and steel sectors during their first compliance period, which is from 2011 to 2014. Four criteria are chosen for the analysis: (i) design of PAT; (ii) economic efficiency; (iii) cost-effectiveness; and; (iv) assessment of barriers to energy efficiency improvement. . The result of the assessment reveals that PAT should be able deliver significant net positive socio-economic benefit to the society. However, in its first cycle it does not appear to promote cost-effective improvement in energy efficiency. The design of PAT scores well on simplicity and with respect to flexibility of compliance to designated consumers, however the main concern with the design are lack of a detailed monitoring and verification protocol and seemingly low level of penalty for non-compliance. The barrier analysis reveals that institutional and certain elements of technological barrier are the most important barriers which can potentially hamper the performance of PAT.

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