The PAT scheme and the shift to CCTS
Intuition
Perform, Achieve and Trade (PAT) was India's first market-based scheme to cut energy use in heavy industry. It began in 2012 under the National Mission for Enhanced Energy Efficiency, one of the missions of India's National Action Plan on Climate Change.
The idea was simple. Each large energy-using plant, called a designated consumer, was given a target to reduce its specific energy consumption: the energy used per unit of output. Plants that did better than their target earned Energy Saving Certificates (ESCerts). Plants that fell short had to buy ESCerts or pay a penalty.
PAT built much of the machinery that the Carbon Credit Trading Scheme now uses: plant-level baselines, normalisation rules, verification and trading on power exchanges. For sectors moving into the CCTS compliance mechanism, PAT is being replaced.
Mechanics
The PAT mechanism
- Designated consumers: large plants in energy-intensive sectors, above set energy use thresholds
- Target: a cut in specific energy consumption over a cycle of about three years
- ESCerts: one ESCert equals one tonne of oil equivalent (toe) of energy saved beyond the target
- Trading: ESCerts have traded on India's power exchanges since 26 September 2017
- Penalties: under the Energy Conservation Act for plants that miss their targets and do not buy enough ESCerts
The cycles
| Cycle | Coverage | Target savings |
|---|---|---|
| PAT I (2012-13 to 2014-15) | 478 designated consumers in eight sectors: aluminium, cement, chlor-alkali, fertiliser, iron and steel, pulp and paper, thermal power and textiles | 6.686 million toe; actual savings 8.67 million toe, about 30% above target, avoiding about 31 million tonnes of CO2 |
| PAT II (notified 2016) | 621 designated consumers in 11 sectors, adding railways, refineries and electricity distribution companies | 8.869 million toe |
| PAT III (notified 2017) | 116 designated consumers | 1.06 million toe |
| PAT IV (notified 2018) | 109 designated consumers, adding petrochemicals and commercial buildings (hotels) | 0.70 million toe |
Later cycles continued to add units and sectors.
PAT and CCTS compared
| Feature | PAT | CCTS |
|---|---|---|
| What is targeted | Energy use per unit of output | Greenhouse gas emissions per unit of output |
| Unit | Tonne of oil equivalent | Tonne of CO2 equivalent |
| Certificate | ESCert | Carbon Credit Certificate |
| Process emissions | Not covered | Covered (important for cement and aluminium) |
| Fuel switching | Rewarded only through energy efficiency | Rewarded directly, because cleaner fuels cut emissions |
Sources
From the research
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