Page 52 - Energy Efficiency Policies in China and India - A Research Paper
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Energy efficiency policies in
China and India
BEE signed an agreement in July 2015 with the Rural Electrification Corporation on behalf of
the consortium with EESL being tasked to operationalize PRGF for Energy Efficiency.13
Traditional finance in India has not managed to come up with a common framework to
encourage companies to go green. However, despite the absence of green credit guidelines,
some banks have taken initiatives independently. The country’s largest bank, the State Bank of
India (SBI) introduced a green home loan, with special concessions (reduced margins, softer
interest rates, and zero processing fees) for environment-friendly housing projects rated by the
Indian Green Building Council (Deka, 2016), which involves criteria for energy efficiency. The
other well-known bank which finances green projects is the Small Industries Development Bank
of India (SIDBI) which provides micro, small and medium enterprises financial assistance for
technology innovative projects, with a preference being given to the green sector. SIDBI offers
financial assistance for investments in energy efficiency projects to existing MSMEs under a
Line of Credit from KfW Development Bank in the framework of the Indo-German Development
Cooperation (SIDBI, 2013). This line of credit has led to the certification of some 22000 dwelling
units and financing of 2000 with a soft loan (Bauer, 2014).
Issuance of green bonds is an innovative financing mechanism to raise long-term and low
cost debt capital to finance projects involving ‘green’ aspects such as emission reduction,
energy efficiency and/or renewable energy generation. In the past couple of years; IREDA, Yes
Bank, Export-Import Bank of India, and IDBI Bank have successfully launched green bonds
in India and abroad. These issues received enthusiastic responses from investors and were
oversubscribed. The Securities and Exchange Board of India (SEBI) has suggested that for
assigning the status of the bonds as green, energy efficiency (efficient and green buildings) may
be one of the broad areas where proceeds of bonds could be invested (SEBI, 2015).
There is sufficient evidence to indicate that providing information regarding environmental
performance has relevance for companies in enhancing their market value (Ganzi et al., 2004;
Kadyan & Aggarwal, 2014 and Murphy, 2002). Listing companies on a stock exchange on
the basis of their environmental performance can prod them to improve their environmental
sustainability. One of the two sustainability indices under the Bombay Stock Exchange (BSE),
Greenex, lists the top 25 stocks with energy efficient practices from the S&P BSE 100. It
calculates the energy intensity of a company (total emissions upon total revenue) and publicly
disseminates it on a real-time basis. This should help in promoting energy efficient practices
and encourage impact investing in economically and environmentally sustainable businesses.
6.2 Institutional arrangements
(1) Bureau of Energy Efficiency
Under the provisions of the EC Act, the Government of India (GoI) established the Bureau
of Energy Efficiency (BEE) to promote energy efficiency through various regulatory and
promotional instruments and to assist in developing policies and strategies with the primary
objective of reducing the energy intensity of the Indian economy. BEE was created by the
Energy Conservation Act, 2001, as a statutory body under the Ministry of Power, in 2002 with
the primary objective of reducing the energy intensity of the Indian economy. BEE has been a
13More information available at: http://www.thehindubusinessline.com/economy/macro-economy/bee-signs-agreement-to-
kickstart-partial-risk-guarantee-fund/article7456338.ece
Research Paper 37
China and India
BEE signed an agreement in July 2015 with the Rural Electrification Corporation on behalf of
the consortium with EESL being tasked to operationalize PRGF for Energy Efficiency.13
Traditional finance in India has not managed to come up with a common framework to
encourage companies to go green. However, despite the absence of green credit guidelines,
some banks have taken initiatives independently. The country’s largest bank, the State Bank of
India (SBI) introduced a green home loan, with special concessions (reduced margins, softer
interest rates, and zero processing fees) for environment-friendly housing projects rated by the
Indian Green Building Council (Deka, 2016), which involves criteria for energy efficiency. The
other well-known bank which finances green projects is the Small Industries Development Bank
of India (SIDBI) which provides micro, small and medium enterprises financial assistance for
technology innovative projects, with a preference being given to the green sector. SIDBI offers
financial assistance for investments in energy efficiency projects to existing MSMEs under a
Line of Credit from KfW Development Bank in the framework of the Indo-German Development
Cooperation (SIDBI, 2013). This line of credit has led to the certification of some 22000 dwelling
units and financing of 2000 with a soft loan (Bauer, 2014).
Issuance of green bonds is an innovative financing mechanism to raise long-term and low
cost debt capital to finance projects involving ‘green’ aspects such as emission reduction,
energy efficiency and/or renewable energy generation. In the past couple of years; IREDA, Yes
Bank, Export-Import Bank of India, and IDBI Bank have successfully launched green bonds
in India and abroad. These issues received enthusiastic responses from investors and were
oversubscribed. The Securities and Exchange Board of India (SEBI) has suggested that for
assigning the status of the bonds as green, energy efficiency (efficient and green buildings) may
be one of the broad areas where proceeds of bonds could be invested (SEBI, 2015).
There is sufficient evidence to indicate that providing information regarding environmental
performance has relevance for companies in enhancing their market value (Ganzi et al., 2004;
Kadyan & Aggarwal, 2014 and Murphy, 2002). Listing companies on a stock exchange on
the basis of their environmental performance can prod them to improve their environmental
sustainability. One of the two sustainability indices under the Bombay Stock Exchange (BSE),
Greenex, lists the top 25 stocks with energy efficient practices from the S&P BSE 100. It
calculates the energy intensity of a company (total emissions upon total revenue) and publicly
disseminates it on a real-time basis. This should help in promoting energy efficient practices
and encourage impact investing in economically and environmentally sustainable businesses.
6.2 Institutional arrangements
(1) Bureau of Energy Efficiency
Under the provisions of the EC Act, the Government of India (GoI) established the Bureau
of Energy Efficiency (BEE) to promote energy efficiency through various regulatory and
promotional instruments and to assist in developing policies and strategies with the primary
objective of reducing the energy intensity of the Indian economy. BEE was created by the
Energy Conservation Act, 2001, as a statutory body under the Ministry of Power, in 2002 with
the primary objective of reducing the energy intensity of the Indian economy. BEE has been a
13More information available at: http://www.thehindubusinessline.com/economy/macro-economy/bee-signs-agreement-to-
kickstart-partial-risk-guarantee-fund/article7456338.ece
Research Paper 37
