India's PAT Scheme Explained: Energy Efficiency Certificates and the Link to Carbon Credits

India's Perform Achieve and Trade (PAT) scheme is one of the world's largest energy efficiency programmes. Launched by the Bureau of Energy Efficiency (BEE) under the National Mission for Enhanced Energy Efficiency, PAT sets specific energy consumption reduction targets for energy-intensive industries and allows those that outperform their targets to earn tradable certificates. Understanding PAT is essential context for any industrial company navigating India's evolving carbon and energy regulatory landscape.

How the PAT Scheme Works

PAT covers 13 industrial sectors designated as Designated Consumers (DCs): aluminium, cement, chlor-alkali, fertiliser, iron and steel, paper and pulp, petrochemicals, petroleum refinery, textile, railways, electricity distribution companies, thermal power plants, and commercial buildings. Each DC receives a Specific Energy Consumption (SEC) reduction target for a three-year compliance cycle. Companies that achieve reductions beyond their target earn Energy Saving Certificates (ESCerts), which can be sold to companies that fall short of their target. This creates a market-based mechanism for energy efficiency improvement.

The Connection Between PAT and CCTS

India's Carbon Credit Trading Scheme (CCTS) is designed to eventually integrate with and potentially supersede the PAT scheme as India's primary market mechanism for industrial decarbonisation. Both are administered by BEE. Both cover largely the same set of energy-intensive industrial sectors. The key difference is the unit of measurement: PAT targets energy intensity (GJ per tonne of output), while CCTS targets carbon intensity (tonnes of CO2e per tonne of output). As CCTS becomes operational with binding compliance periods, companies that have built robust energy monitoring systems for PAT will find the transition to carbon accounting significantly easier, because energy consumption is the primary driver of Scope 1 emissions in most industrial processes.

What This Means for Your Company

Industrial companies that are already PAT Designated Consumers have a significant head start on CCTS compliance: they have metering infrastructure, energy data systems, and experience with BEE's verification processes. The strategic priority for these companies is to extend their measurement from energy to carbon — adding emission factors to their energy consumption data to build a carbon inventory, and then assessing their position relative to CCTS intensity targets. Companies that outperform their CCTS targets will be able to generate and sell Carbon Credit Certificates, creating a new revenue stream from their energy efficiency and decarbonisation investments.