The Energy Conservation (Amendment) Bill, 2022 – A Retort to Increasing Emissions

On August 9, 2022, the Energy Conservation (Amendment) Bill, 2022 (the “Bill”) passed the muster of the Lok Sabha (lower house of the Indian Parliament). The Government of India had identified new areas to achieve higher levels of penetration of Renewable energy and the bill sought to enhance demand for renewable energy at the end- use sectors such as Industry, buildings, transport etc.

What demanded the introduction of the Bill?

Decarbonization. The Bill, which amends the Energy Conservation Act, 2001 (the “Act”), introduces a series of modifications that opens the door for sustainable development. According to Bill’s statement of objects and reasons, it aims to, among other things, promote the use of green fuels and the growing renewable energy sector, ensure industrial energy efficiency, and establish a domestic “carbon market”, and carbon trading scheme to fulfil the commitments made by India at COP-26 (Conference of Parties -26) in Glasgow in 2021.

 

What are the major changes proposed in the Bill?

 

The Penalty


To enhance the effectiveness of the law and create stronger deterrence, the bill introduced stricter enforcement mechanisms. The changes include new penalties and aggravation of existing penalties for violations of certain provisions relating to the efficient use of energy and its conservation[1], use of deceptive names (introduced in the Bill)[2], and provision of information[3].

A new penalty introduced, for instance, is that if a vehicle manufacturer fails to comply with fuel consumption standards, he will be liable to pay an additional penalty (in addition to the penalties he is liable to under the Act) per unit of vehicles sold in the corresponding year, as follows:

  • twenty-five thousand rupees per vehicle for non-compliance with norms up to 0.2 litres per 100 km.
  • fifty thousand rupees per vehicle for non-compliance with norms above 0.2 litres per 100 km.[4]


Carbon Credit Trading


The Bill seeks to reduce carbon emissions by creating a carbon credit trading scheme. The Central Government is empowered under Section 14AA of the Bill to specify such a scheme.

Interestingly, the Act has enumerated a scheme through which energy savings certificates are issued by the Central Government to those plants or industrial units whose energy consumption is less than the prescribed norms and standards. Units that are unable to comply with the set energy consumption norms are entitled to purchase the energy savings certificate to ensure compliance. The industrial units that fail to meet the energy savings targets even after purchasing the energy saving certificates are liable to be punished with a fine as per the provisions of the Act.

To understand how a carbon credit trading scheme would aid in reducing emissions, we must understand what a carbon credit trading scheme is. A carbon credit is a certificate/permit that gives its holder the right to emit a certain amount (usually a tonne) of carbon dioxide. Based on historical emissions, carbon credits are provided to an organisation in a particular sector. If the organisation goes over its allocated amount of carbon credits, then it would have to purchase more credits from the carbon market, where carbon credits are bought and sold. And the price of the carbon credit is determined by the market forces of supply and demand. Additional factors that influence the pricing of carbon credits include regulations established by the government, international climate change protocols, emission trading schemes, and a carbon tax. This scheme or system of buying and selling carbon credits is, in simplistic terms, a carbon trading scheme. Hence, the carbon trading scheme aims to reduce carbon/greenhouse gas emissions by assigning a financial cost for causing pollution. This implies that for such units, carbon emissions will now be equivalent to any other capital investment like raw materials or labour.


Expanding, Enlarging, and Empowering


  1. Vehicles and Vessels– The Act, under Section 14, empowers the Central Government to set standards to enable efficient use of energy and its conservation for any equipment, appliance that consumes, generates, transmits, or supplies energy. The Bill seeks to include vehicles (as defined under the Motor Vehicles Act) and vessels into the scope of Section 14. Corresponding provisions for penalties have also been included in the Bill for violations of the provisions of the Act.
  1. Buildings- Under the Act, the Central Government and the Bureau of Energy Efficiency have the authority to lay down energy conservation standards for buildings, ascertained in terms of area. The Bill seeks to amend the provision to the effect that, now, the Bureau and the government shall set energy conservation and sustainable building codes, that shall elaborate upon standards for energy efficiency and conservation, use of renewable energy, and other requirements for green buildings.
  1. Residential Buildings– The energy conservation code in the Act has only been made applicable to commercial buildings. The Bill seeks to include residential buildings along with commercial buildings under the scope of the Code. As per the amended provision of the Bill, the State Governments have also been empowered to lower the load threshold. By bringing residential buildings under the scope of the energy conservation code, the responsibility for ensuring mindful energy consumption would effectively fall on citizens as well as industries.
  1. Composition of BEE Governing Council– The governing council of the Bureau of Energy Efficiency (BEE) created under the Act has twenty, not exceeding twenty-six members, which is intended to be expanded to thirty-one, but not exceeding thirty-seven members by the Bill. This expansion is likely intended to improve bureaucratic efficiency in the administration and enforcement of the provisions of the Act.
  2. State Electricity Regulatory Commission– The Act empowers the Bureau of Energy Efficiency to make regulations as necessitated, with the approval of the Central Government[5]. The Bill also envisages empowering the State Commission to make regulations for discharging its functions under this Act[6].


Concluding Thoughts


The amendments that are envisioned under the Bill are strides in the right direction for enabling better regulation of carbon emissions and promoting the objective of sustainable development by encouraging a switch from fossil fuels to renewable energy sources. While the carbon trading scheme under the Bill has the right intentions, it is still lacking in clarifications pertaining to the market structure and incentive scheme for facilitating carbon trading in the country.

As with any other law, strict enforcement and alignment of all the relevant stakeholders contingent on the success of proposed policies under the Bill would be key in ensuring that India achieves its goals towards facilitating a steady shift from fossil fuels to promotion of new and renewable energy (wind, solar, etc.), accomplishes milestones contemplated in the National Green Hydrogen Mission, and actualizes its vision to meet 50 per cent of its energy requirements from renewable sources by 2030, as envisaged under the ‘Panchamrit’ strategy announced at the COP 26 conference in Glasgow.  

References:

[1] Section 14 clause (c) or clause (d) or clause (h) or clause (i) or clause (k) or clause (l) or clauses (n) and (x); and Section 15 clause (b) or clause (c) or clause (h) of the Act.

[2] Sub-section (1) of Section 13A of the Bill.

[3] Section 52 of the Act.

[4] Second proviso to Section 26 (2) of the Bill.

[5] Section 58 of the Act.

[6] Section 13 of the Bill.

Image Credits: Photo by catazul from Pixabay 

The amendments that are envisioned under the Bill are strides in the right direction for enabling better regulation of carbon emissions and promoting the objective of sustainable development by encouraging a switch from fossil fuels to renewable energy sources. While the carbon trading scheme under the Bill has the right intentions, it is still lacking in clarifications pertaining to the market structure and incentive scheme for facilitating carbon trading in the country.

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The Indian Telecommunication Bill, 2022: An Au Courant Approach

Telegraph was first introduced in India in the year 1851 and telephone exchanges were set up in the early 1880s. The Indian Telegraph Act, 1885; the Indian Wireless Telegraphy Act, 1933; the Telegraph Wires (Unlawful Possession) Act, 1950, were enacted to suit the needs of the day. The usage of the telegraph as a telecommunication mode became obsolete in 2013, and today technologies such as 4G and 5G, the Internet of Things, Industry 4.0, M2M communications, Mobile Edge Computing, etc. are revolutionising the sector.

While these technologies create new opportunities for social and economic growth, issues relating to dispute resolution and penalties, data privacy, the infrastructural needs of the industry, etc. become more complex.

With the objective of reforming the telecommunication law and making it more sensitive towards the concerns of this ever-evolving sector, a consultation paper on the “Need for a new legal framework governing Telecommunication in India”[1] was issued by the Department of Telecommunication on July 23, 2022, inviting comments.

The Consultation Paper proposed a new legal framework to address the following:

  1. Simplification of the regulatory framework while ensuring regulatory certainty, minimising policy disruption, promoting investment, and preventing retrospective application.
  2. Spectrum assignment should be to best serve the common good and widespread access, with utilisation of spectrum liberally and neutrally allowed, as should the deployment of new technologies, the repurposing and rearrangement of frequency range, and the authorisation of the central government to share, trade, lease, and surrender spectrum.
  3. Provide a robust regulatory framework to obtain Right of Way and resolve disputes thereby ensuring the deployment of new technologies and ensuring continuous connectivity.
  4. Simplify the framework for mergers, acquisitions, or other restructuring.
  5. Ensure the license is not suspended or terminated during Insolvency while services are being provided, and ensure there is no default on license or spectrum dues.
  6. Expanding the scope of the Universal Service Obligation Fund to address delivery of telecommunications service to underserved rural and urban areas.
  7. Proportionate penalty for offences.
  8. Address situations of public emergency, public safety, or national security.

The draft Telecommunication Bill 2022 was created in response to public feedback on the consultation paper [2].  Further comments on the draft have been invited till 20th October 2022. It intends to replace the Indian Telegraph Act, 1885; the Indian Wireless Telegraphy Act, 1933; and the Telegraph Wires (Unlawful Possession) Act, 1950.

 

Key Takeaways of the Draft Telecommunication Bill, 2022

 

Over-the-top (OTT)

 

There was an interpretational discord as to whether OTT is regulated under the current legal system. The government is of the opinion that OTT is adequately covered under the definition of “Telegraph” in the Telegraph Act. However, there is no explicit legal backing. The proposed bill explicitly clarifies that OTT communication services are a telecommunication service. The bill’s definition of telecommunication service incorporates current technological trends in the industry and includes voice and video communication services, machine-to-machine services, and broadcasting services. Any transmission and receipt of a message through a wire, radio, optical, or electromagnetic system would be telecommunication. Such telecommunication, when intended to be received by the general public, becomes a broadcasting service. Therefore, an OTT service provider, be it broadcasting/streaming services or data/video call services, falls explicitly within the ambit of the Telecommunications Bill, 2022.

 

User-Beneficial Provisions

The bill requires that the identity of the person sending a message be made available to the user receiving the message at all times. Therefore, any call recipient from a landline, cellular, or through OTT platforms like WhatsApp, Facetime, or Zoom calls will have information about the caller. To achieve this end, the KYC of all the users has to be obtained by all service providers, including OTT platforms.  Users are prohibited from providing false information about their identity when obtaining telecommunications services. Any misrepresentation of identity is punishable with imprisonment for one year or a fine of up to 50,000 rupees. An advertisement or promotional message, whether fictitious or real, shall not be sent unless consent is procured from the recipient. Any unsolicited message shall be an offense, and the sender is liable to be penalized. The Bill formulates a mechanism for the preparation and maintenance of the ‘Do Not Disturb’ register. The user-beneficial provisions and the penalty for violation are not substantial enough. When the losses caused to the public because of cyber frauds are more than 1 lakh crore each year, the penalty for such fraud of INR 50,000 is not a deterrent. It is ideal that such offenders are abstained from providing telecommunication services so that repeated cyber frauds or impersonations can be avoided.

 

Spectrum Allocation

 

The Bill provides that spectrum allocation can be done only through auction, directly under circumstances specified in the schedule, such as national security, or in such a manner as mentioned in the rules. The Hon’ble Supreme Court of India, in “Union of India & Ors v. Centre for Public Interest Litigation and other” decided on February 2, 2012, stated that:

“When it comes to the alienation of scarce natural resources like spectrum, etc., it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest. In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process.”

The Hon’ble Supreme court’s order mandates spectrum allocation only via auction. However, allocation of Spectrum under extraordinary circumstances such as national security and defence by the Central Government is understandable. Nevertheless, the entire list of Schedule I activities wherein the government is authorized to allocate spectrum to BSNL/MTNL or can assign it to “any other function or purpose as determined” is far too wide to defeat the very purpose of the order.  Further, it is ideal that such spectrum allotted under Schedule I, shall not be resaleable but only returnable to the government.

The Bill provides the Central Government rights to repurpose the spectrum frequency for a different use (“re-farm”), rearrange the frequency range (harmonization), or assign part of the assigned spectrum to another entity for efficient spectrum utilization, or if the spectrum remains unutilized.

 

Seamless Transition 

There is a new set of terms and conditions that will be formed after the Act and rules come into force. A telecom service provider and telecom infrastructure provider have a choice on whether to migrate to the new set of terms and conditions under this bill or the existing terms as per their existing license. A wireless equipment provider has to procure new authorisation (instead of a license). The existing spectrum licenses shall continue to remain valid for a period of 5 years or until the date of expiry, whichever is earlier. The existing rules under the old Telegraph enactments shall continue until superseded by the new rules. All Telecommunication Bill provisions are prospective in nature. These mechanisms would allow greater acceptance of the new Act and a seamless transition.

 

Penalties and Offences

In casesof breach of the terms and conditions of a license, registration, authorisation, or assignment, the government can revoke, suspend, or curtail such approvals. Further, the government can impose a penalty based on the severity of the breach after considering whether it is severe, major, moderate, minor, or non-severe. A licensee can provide a voluntary undertaking to the authority with respect to any breach or delay. Acceptance of a voluntary undertaking will put the proceedings on hold. An alternative dispute resolution mechanism for resolving certain disputes or classes of disputes is envisaged. The Bill provides a list of offences covered by it, the imprisonment or fine imposed, and whether such offences are bailable or cognizable.

 

Right of Way

The mechanism for Right of way is differentiated on the basis of whether it is public property or private property. In the case of public property, the authority has to provide permission in a time-bound manner.  In the case of private property, parties may mutually negotiate an agreement. To overcome the issues of the sale of property along with the telecom infrastructure, an explicit provision has been enshrined to state telecom infrastructure is different from the property it is installed on. Therefore, the property owner cannot claim ownership of the tower in his/her property, and it remains independent of any sale or lease. It is ideal that the Right of Way arrangements/agreements be standardized. Further, the legal framework should also encompass penalties in case of violation of the Right of Way by either the telecom infrastructure provider or the property owner.

 

Common Ducts & Cable Corridors

An express provision is planned under which the Central Government will require infrastructure projects to have common cable ducts and cable corridors established and such cable made available to facility providers on an open access basis.

 

Restructuring & Insolvency

A licensee entity undergoing restructuring/merger/acquisition has to merely inform the authority and an explicit prior approval is not required. The restructured entity has to thereafter follow the rules therein. In case of insolvency, service continuity is given priority, and the entity retains control over Spectrum. An enabling framework has been made for the Central Government to intervene and revert the control of the Spectrum to the Central Government in case the entity fails to provide telecommunications services, and has promptly paid the spectrum licensing fees/charges.

 

Regulatory Sandbox

A regulatory framework of simplified license terms and conditions to empower the start-up ecosystem is formulated, whereby such entities can live-test their products and services in a controlled environment.

 

The Telecommunication Bill is a framework that intends to create a comprehensive and centralised legal ecosystem for an industry that is rapidly expanding with the addition of new players in the market, investments, and technology. How the Telecommunication Act, Digital Data Protection Act, and Digital India Act finally shape up to create a legal landscape to address the new technological challenges remains to be seen. The proposed Telecommunications Bill has addressed the concerns of the present while keeping an eye on the future in its simple, light-touch approach- a concrete step in the right direction.

References:

[1] https://dot.gov.in/sites/default/files/Consultation%20Paper%20final%2023072022-1.pdf?download=1

[2] https://dot.gov.in/sites/default/files/Draft%20Indian%20Telecommunication%20Bill%2C%202022.pdf

 

Image Credits: Photo by Mario Caruso on Unsplash

The Telecommunication Bill is a framework that intends to create a comprehensive and centralised legal ecosystem for an industry that is rapidly expanding with the addition of new players in the market, investments, and technology. How the Telecommunication Act, Digital Data Protection Act, and Digital India Act finally shape up to create a legal landscape to address the new technological challenges remains to be seen.

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