India is planning to create a £10 billion-a-year market in energy-saving certificates that officials hope will burnish the country’s green credentials and help to avert a looming energy crisis.
Under the plans, due to be implemented in April next year, more than 700 of the country’s most polluting industrial units, such as steel and cement plants, will be given targets for reducing energy consumption.
Those that better their targets will be able to sell energy savings credits to those that fail to make the required cuts.
Ajay Mathur, director-general of the Bureau of Energy Efficiency, the government department leading the project, told The Times he believed that the scheme could save the equivalent of 10 million tonnes of oil a year.
Officials believe that transactions in energy savings certificates could reach £10 billion a year and help to save about 5 per cent of the national energy consumption by 2015.
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The move comes as India struggles to provide power to its people, 400 million of whom live in houses that are not connected to the national grid.
Manmohan Singh, the Prime Minister, has pledged “power for all” by 2012, but demand for electricity is likely to increase more than fivefold to 3,870 terawatt hours a year by 2030, according to McKinsey, the consultancy.
In the same period, the number of vehicles on India’s already congested roads is expected to rise sevenfold, to about 380 million vehicles.
If those predictions are realised, India, which relies on its modest coal reserves for the lion’s share of its power and already imports 70 per cent of the oil it uses, would become the third-largest consumer of energy, after the United States and China.
Its share of world energy consumption will nearly double, pitting it against international rivals in a fierce battle for scarce resources.
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The energy savings trading scheme is one of several projects designed to tackle the power deficit and cut the emissions blamed for climate change.
There are also plans to distribute 200 million solar powered lamps in the next few years, and to install solar panels on all government buildings by 2012.
Among the more eye-catching experiments is a recent bonus plan for banking executives.
Those whose lending results in villages becoming “fully solar electrified” — by funding small photovoltaic systems capable of powering portable TV sets and street lights — will receive a 100,000 rupee cash prize from the Ministry of New and Renewable Energy, enough to buy a car.
The grandest scheme of all is a $19 billion (£11.67 billion) plan to make India a global leader in solar power.
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The plan, which was launched this week, calls for India to generate 200GW of power from solar sources by 2050.
The entire world can generate about 14GW of solar power today.
India will join a growing number of counties exploring energy savings trading schemes.
Several states in the US have instituted similar initiatives, as has New South Wales in Australia.
Italy, Britain and France have also established schemes for energy-saving certificates.
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However, only a handful of trades have occurred in the British scheme, which is overseen by Ofgem, the regulator of gas and electricity markets, according to the World Resources Institute, meaning that effective prices have not been set.