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Renewable energy credits becoming a reality in India

September 20, 2009


In order to combat global climate change, India recently announced that 5% of their national energy needs will come from renewable sources by 2010, and increase that amount by an additional 1% each year to reach a total of 15% by 2020.
Instead of just writing a new federal law to require renewable sources of energy, India simply asked individual state governments to voluntarily comply with the renewable energy targets.
This unique system was created after recongizing that sources of renewable energy vary from state to state, and enforcement of such a standard would be extremely cumbersome.
In order to collectively achieve a 15% target as a nation, some Indian states will have to supply more renewable energy, while other produce less. The national target of 15% by 2020 assumes high potential states would lead the pack.
Furthermore, to create a level playing and encourage natural market forces to spur the renewable energy industry, the government of India is considering issuing Renewable Energy Certificates (RECs) in the coming years. RECs would have a fixed price and be a tradable commodity, allowing individual states with few renewable resources to buy renewable energy from other states.
In principal, RECs have been accepted by many countries around the world and could be a very useful tool to encourage the develop the renewable energy market in India.
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