The proposed initiatives for the trading of Energy Savings Certificates (ESCerts).
In recent years, India has been taking steps to reduce its carbon footprint and promote sustainable development. One of the proposed initiatives is the trading of Energy Savings Certificates (ESCerts). These certificates would represent the energy saved by energy-intensive industries, which can then be traded in a market-based system.
To make these ESCerts more compatible with other carbon trading schemes, it has been proposed to make them fungible with Emission Reduction Units (ERUs). An ERU is a unit of measurement that represents the reduction of one metric tonne of CO2 equivalent of emissions. By making ESCerts fungible with ERUs, they can be easily traded in the international carbon market.
To determine the conversion factor between ESCerts and ERUs, a formula has been proposed. This formula takes into account the annual CO2 emissions of a designated consumer (DC), as well as their energy consumption and production levels. The conversion factor is calculated by dividing the number of ERUs by the number of ESCerts, based on this formula.
It is important to note that each designated consumer will have a unique conversion factor, based on their specific energy usage and production levels. Therefore, separate conversion factors will need to be calculated for each designated consumer.
To ensure transparency and clarity in the trading of these certificates, it has been recommended that the conversion of ESCerts to ERUs be done well before the actual trading takes place. This will allow designated consumers to plan accordingly and have visibility on the available tradable units. The appropriate conversion factors can be communicated to the registry (POSOCO) to facilitate this process.
The trading of ESCerts in India has the potential to incentivize energy-intensive industries to become more energy-efficient and reduce their carbon footprint. It also provides an opportunity for these industries to earn revenue through the trading of these certificates. By making ESCerts fungible with ERUs and establishing a clear and transparent trading process, India can take a significant step towards promoting sustainable development and combating climate change.