Sunday, September 21, 2008

Towards energy efficiency

'Save energy, pay less' should be the new business mantra

Since the last few weeks, almost all newspapers are talking on a daily basis about the forthcoming nuclear deal and impending energy crisis. Be that as it may, it will take at least a decade for the deal to materialise and start provisioning electricity. Undoubtedly, energy sector assumes critical importance in view of the ever-increasing energy needs and the huge investments required to meet them. Equally, as the world becomes more dependent on electrical appliances, energy consumption is ought to rise rapidly. Sample this: with buoyant incomes, close to 750 million rural Indians will demand various variants of appliances. In case of India, despite having an installed capacity of over 1,35,000 MW, the country faces a peak and average energy shortages of about 15 per cent and 10 per cent respectively. And for all those who are not able to comprehend this technical statistic, it is nothing but a statistical suggestive of the persistent power cuts we face.

However, amidst these gloomy (read: dark) situation, the Standards and Labelling Programme by the Bureau of Energy Efficiency (BEE) seems to make some significant difference. In its present form, labelling and star rating indicates the product's energy efficiency, which enables consumers to make informed decisions. It’s predicted that use of energy-efficient lighting alone could save nearly 80 per cent of electricity and energy-efficient air conditioners could save 30 per cent in a typical Indian household. Moreover, the government has reduced excise duty on air-conditioners and refrigerators – gradation for exemption will largely depend on the BEE star rating – in order to encourage such energy efficient appliances. The government is also planning to introduce a differential tax structure, whereby energy efficient appliances would attract lower taxes. That simply implies that if you buy a five-star rated air conditioner, you will be paying pay less tax than a four or a three-star one. But then, these ratings are currently confined to micro-markets (high-end consumer durables) that actually cover a very limited segment. In order to cover large markets that in turn would enable more energy saving at macro levels, more white goods have to be brought under the aegis of these rating schemes. Appliance like water heaters, irons, CFLs, pumps and motors (that actually consume more energy than a normal TV or fridge or AC) also needs to be considered for ratings, as these may add a substantial figure to the energy saving list. To further enhance the effectiveness and success rate of this programme, the awareness (or promotion)campaign has to be extended beyond the hinterland of the country and that too in regional languages. The campaigns have to compulsorily focus on the economies and savings in both long and short terms. The success rate largely depends on consumers understanding of paying more in the short run to save more in the long run.

This move by the Ministry of Energy seems to incentivise producers to improve quality. But then, as for any state-controlled/coordinated scheme, its eventual successes largely depends on the companies’ communication and reach strategies (in terms of products covered and regular roll-back of non star rated products). But this time, instead of appealing to the government to do something like cutting the trade barriers on green goods and other supply side interventions, I would urge my discerning readers to deal with demand management and go for energy efficient products for an ablest change, activist of course and perforce.


1 comment:

  1. Their are two constraints I am aware of. First of all, only solar water heating is affordable and advertised while eco-products should be cheap. Recycled stationery is costlier then plastic counterparts.

    Secondly Green building council certificates seem overpriced unlike in US which has empaneled builders forming their team of consultants.