The document outlines the Perform, Achieve, and Trade (PAT) program initiated by the Indian government to enhance energy efficiency in energy-intensive industries through a market-based mechanism that allows for the trading of energy savings certificates (ESCerts). Launched in 2012, PAT has shown significant energy savings and emission reductions across various sectors, prompting the expansion of its coverage in subsequent cycles. The program emphasizes the involvement of designated consumers, certified auditors, and continuous improvement in energy efficiency standards, with substantial investment encouraged in energy-efficient technologies.

1. Ajay Mathur
PAT (Perform, Achieve & Trade):
An Innovative Programme to
promote Industrial Energy
Efficiency
Slide templates adapted from ALLPPT.com _ Free PowerPoint Templates, Diagrams and Charts

2. Overview
• The PAT Experience
– Design
– Implementation & Impacts of PAT-I
– ESCerts Issuance & Trading
– PAT-II and PAT-III
• Policy Issues
– Legal Basis
– Fairness, including credibility, transparency and
integrity
– Sustainability, including transaction costs and
effectiveness
Page 2 of 21

3. PAT – The Design Experience
• Developed in response to Government
commitment in 2008 National Action Plan
on Climate change that, as part of National
Mission on Enhanced Energy Efficiency:
Put into place, a market based mechanism to enhance
cost effectiveness of improvements in energy efficiency
in energy-intensive large industries and facilities, through
certification of energy savings that could be traded
• The 2001 Energy Conservation Act already
provided for:
 Energy-intensive industrial units to be identified as
“designated consumers”
 Energy consumption norms to be specified for designated
consumers
 Accreditation of energy auditors who can assess energy use in
designated consumers
Page 3 of 21

4. PAT –The Design Experience
Establishing energy con-
sumption norms was a
challenge
– as every sector included
some of the world’s most
energy efficient units
Problem was the band-
width
– every sector included
units which used 2-6
times as much energy
to produce a tonne of
product as compared
to the best
0
2
4
6
8
10
12
14
16
550-600 600-650 650-700 700-750 750-800 800-850 850-900 900-950
Thermal Specific Energy consumption, Kcal/kg-clinker
NumberofUnits
2005-06
Page 4 of 21

5. PAT – The Design Experience
PAT requires every plant – including the world’s best – to
improve their specific energy consumption over a 3-year
period
• Plants exceeding their targets receive Energy Savings
Certificates (ESCerts) for excess savings which can be
traded for compliance, or banked for next cycle
• PAT-1 covered 478 plants, accounting for 35% of the total energy
use in India; targets sought 4.05% reduction
in specific energy consumption – 6.7 million toe/annum
Page 5 of 21

6. The PAT Mechanism
SEC: Specific Energy Consumption
(Energy entering the factory gate over a year/Material leaving the
factory gate over the year)
Trading
Exchan
ge
BaseSEC
TargetSEC
Achieved
SEC
BaseSEC
TargetSEC
AchievedSEC
BaseSEC
TargetSEC
AchievedSEC
BaseSEC
TargetSEC
AchievedSEC
ESCert Issued ESCert
Purchased
Non
Compliance
Trading Not
Required
CompliedComplied
Complied
Penalty
Imposed
IVIII
III
Page 6 of 21

7. PAT – The Design Experience
• Required percentage
reduction in SEC is
smallest for the unit
with the lowest SEC,
and largest for the unit
with the highest SEC
• For example, if SEC %
reduction is 4% for the
unit with lowest SEC
(SEC of 500, say), then
SEC %-reduction target
for a unit with SEC of 950
will be:
(4% X 950/500) = 4%
Page 7 of 21

8. PAT was launched on 31st March 2012 with
a 3-year target period
Page 8 of 21

9. PAT – The Implementation Experience
• Certified auditors were accredited, and
audit agencies were empanelled.
• Familiarization workshops were organised – at
least once a year - in each state
• Technology options were assessed and
documented by CII-GBC, CSTEP, TERI etc.
• Technical committees for each sector set
up to address implementation issues
• It was soon evident that operational parameters
were changing, and would be different in
the base-line and target years.
• Changes were often due to reasons beyond the
control of plant management
Page 9 of 21

10. PAT – The Implementation Experience
In each sector, a set of
normalization formulae were
prepared in order to address
changes in operational
conditions beyond the
control of plant management
Page 10 of 21

11. PAT – The Implementation Experience
- Impact
S. No Sectors
No. of DCs
evaluated
Savings
(Million toe)
1 Aluminium 10 0.73
2 Cement 75 1.44
3 Chlor- Alkali 22 0.13
4 Fertilizer 29 0.83
5 Iron & Steel 60 2.1
6 Paper & Pulp 26 0.26
7 Textile 82 0.12
8
Thermal Power
Plant
123 3.06
Total 427 8.67
Page 11 of 21

12. Energy Savings Certificates
• The energy savings certificates (ESCerts) are
issued in electronic form.
• The value of one energy savings certificate, for
penalty purposes, is equal to weighted price of one toe
of energy consumed
• The ESCerts issued in a cycle period shall remain valid
till the completion of compliance period of the next
cycle.
• The DC who has been issued ESCerts may sell
them through Power Exchange, or may bank
them until the next compliance cycle.
• The ESCerts purchased by a DC for the purpose of
compliance shall after their submission to BEE stand
expired
Page 12 of 21

13. ESCert trading
• Over 77,000 PAT-I ESCerts have been
traded till now
• Trading started at about Rs.1,200 per
Escert, but is now trading at Rs. 1,000 per
ESCert
• The penalty price is about Rs. 10,000 per
non-achieved toe (ESCert)
Page 13 of 21

14. PAT Cycle Activities
DC
Notification
Data
Collection
&
Verification
Consultatio
n
Ministerial
Technical
Committee
&
Notification
Implement -
ation
Achieveme
nt
Verification
& ESCert
Trading
Minimum
Energy
Consumption
Notification.
Say 30000
toe for
cement
11 Sectors
notified so
far
Data
Collection &
3rd party
verification
for Baseline
Data
collected
from 1000
plus
industries
With
Industries,
Associations,
Ministries,
Research
Bodies etc.
250 Plus
consultation
meeting/wor
kshops/visit
s
70 TCM to
discuss
Targets,
Saving
potential &
international
practices
PAT1:
31.3.12
478 units
PAT2:
30.3.16
621 units
PAT3:
31.3.17
(Proposed)
3 Year cycle
for each PAT
Cycle
PAT1: 2012-
15
PAT2: 2016-
19
PAT3: 2017-
20
Verification
by Accredited
Energy
Auditors &
Trading
427
industries
verified for
PAT1
Page 14 of 21

15. PAT-I: Impacts
Energy
Saving
8.67 mtoe
5635 MW
1.25% of
India’s
total primary
energy
supply
Emission
Reduction
31 million
tonnes
of CO2
1.93% of
India’s
emissions
Skill Deve-
lopment
Capacity
building: 5000+
Engineers and
operators
13718 Energy
Auditors &
Managers
219 Accredited
Auditors
Savings
Rs 9,524
Crores
($1.5 bln)
from saved
energy con-
sumption
and avoided
generation
Investment
Encouraged
investments for
energy efficient
technologies for
domestic manu-
facturing
Rs24,517crore
($4 bln)
invested
Page 15 of 21

16. PAT Cycle II (2016-2019)
Sr
No
Sector
Notified
Nos
Energy
Consumption
Old DCs
Total
No of
DCs
Energy
Consumption
Target
2018-19
Nos Nos Nos Nos mtoe mtoe
Old (PAT Cycle I)
New (PAT Cycle II)
1 Aluminium 10 7.71 10 12 10.66 0.566
2 Cement 85 15.01 84 111 21.43 1.116
3 Chlor- Alkali 22 0.88 21 24 1.77 0.101
4 Fertilizer 29 8.2 29 37 8.25 0.446
5 Iron & Steel 67 25.32 62 71 40.44 2.135
6 Paper & Pulp 31 2.09 25 29 2.68 0.1455
7 Textile 90 1.2 85 99 1.48 0.0875
8
Thermal
Power Plant
144 104.56 132 154 120.16 3.134
9 Refinery 18 18.5 1.105
10 Railways 22 1.39 0.0333
11 Discom 44
Total 478 164.97 448 621 226.76 8.869 Page 16 of 21

17. PAT Cycle III (2017-2020)
• 308 DCs from already notified sectors have
been identified for Baseline verification for
inclusion
• 7 empanelled agencies engaged in
verification
• Verification of 273 DCs has been completed
• 116 New DCs have been included in the
Cycle
• Energy saving target for these new DCs is
1.01 million toe.
Page 17 of 21

18. PAT – Legal Framework
• Specification of designated consumers,
energy consumption norms, and third-
party assessment by accredited auditors was
provided for in the Energy Conservation Act
• Issuance of certificates for excess savings and
trading of these certificates was not provided
in the Act
 Amendment to the Act was prepared, and
passed by Parliament in August 2012
 Rules and targets (for PAT-1) were notified in
March 2012
Page 18 of 21

19. Policy Issues - Fairness
Extensive consultation during design and implementation
phases
• Draft document was widely circulated, and discussed in
96 sectoral and regional/state meetings
• Frequent letters to designated consumers, and state and sectoral
meetings
• Technical committees considered inputs from designated consumers,
and developed normalization rules
• Inputs were assessed, and key changes made in design,
enhancing ownership of mechanism, including
 Differentiated savings
 Normalizing savings to account for differences in baseline year
and target year
Check audits on a sample of designated consumers
Page 19 of 21

20. Policy issues - Sustainability
• Savings achieved were much higher than the target
 Were 1st phase targets not stringent enough ?
• Three more sectors have been added to
PAT-II
 618 designated consumers account for over 50% of energy
consumption in India
• Move towards starting a new batch of industries
every year, each on a 3-year cycle
 Smoothens workload and creates an ongoing dynamic of
energy efficiency enhancement
 New units in existing sectors covered in PAT under PAT-III
Page 20 of 21

21. Lessons
• Consultation before the notification of PAT
helped in its acceptability
• Technical committee devised normalization
rules, and auditing and check auditing by
third-party auditors, accredited by an open
process, built up credibility and fairness
• Overachievement of targets in PAT-1
questions credibility of target setting
Page 21 of 21