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Energy Conservation Act, 2001

Why Energy Conservation Act, 2001 enacted?

The magnitude of energy consumption has always been taken as an indicator of development status of any economy. However, what actually a country requires is not energy per se but the services that energy provides. A nation can increase the service by keeping the same inefficient device and pump in more energy. More energy will positively not accelerate the economic growth as long as economy has high-energy intensity. India's energy intensity per unit of GDP is higher by 3.7 times of Japan, 1.4 times of Asia and 1.5 times of USA, indicating to very high energy wastage. In the globalized economy, countries with high energy intensity may become uncompetitive due to high energy input cost. Therefore, energy cost reduction must become one of the important benchmarks for economic success. Efficiency in consumption of energy and its conservation would be one of the most important means of energy cost reduction and also for meeting future energy demand.
There is a huge scope of energy saving in the country. Various studies undertaken suggest substantial energy saving potential in industrial, commercial and domestic sector. Efficient use of energy provides the least cost and environmentally friendly option for capacity creation in the shortest time frame. Energy efficiency also assumes further importance as "one unit of energy saved at consumer end, avoids 3 units of fresh capacity addition".

With the background of high energy saving potential and its benefits, bridging the gap between demand and supply, reducing environmental emissions through energy saving, and to effectively overcome the barrier, the Government of India has enacted the Energy Conservation Act 2001. The Act provides the much-needed legal framework and institutional arrangement for embarking on an energy efficiency drive.

Under the provisions of the Act, Bureau of Energy Efficiency has been established with effect from 1st March, 2002. The Bureau would be responsible for implementation of policy, programmes and coordination of energy conservation activities in the country.


"energy" means any form of energy derived from fossil fuels, nuclear substances or materials, hydro-electricity and includes electrical energy or electricity generated from renewable sources of energy or bio-mass connected to the grid;

"energy manager" means any individual possessing the qualifications prescribed under clause (m) of section 14

"energy audit" means the verification, monitoring and analysis of use of energy including submission of technical report containing recommendations for improving energy efficiency with cost benefit analysis and an action plan to reduce energy consumption;

"Energy Management Centre" means the Energy Management Centre set up under the Resolution of the Government of India in the erstwhile Ministry of Energy, Department of Power No. 7(2)/87-EP (Vol. IV), dated the 5th July, 1989 and registered under the Societies Registration Act, 1860;

"designated consumer" means any consumer specified under clause (e) of section 14;

"Bureau" means the Bureau of Energy Efficiency established under subsection (l) of section 3

List of Energy Intensive Industries and other establishments specified as designated consumers

  • Aluminium
  • Fertilizers
  • Iron and Steel
  • Cement
  • Pulp and paper
  • Chlor Akali
  • Sugar
  • Textile
  • Chemicals
  • Railways
  • Port Trust
  • Transport Sector (industries and services)
  • Petrochemicals, Gas Crackers, Naphtha Crackers and Petroleum Refineries
  • Thermal Power Stations, hydel power stations, electricity transmission companies and distribution companies
  • Commercial buildings or establishments

    The Energy Conservation Act , 2001 ( download )

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