Impact of the Perform, Achieve, and Trade scheme on decarbonizing Indian industrial production: a PSM DiD approach

Abstract

Bureau of Energy Efficiency (BEE) of India launched the Perform, Achieve, and Trade (PAT) scheme in 2012 to improve energy efficiency in key energy-intensive industrial sectors. These efficiency improvements were expected to save between 11% to 16% of industrial energy consumption compared to baseline sector usage.This paper examines the ex-post consequences of PAT Cycle-1 for the iron & steel and textile sectors to provide evidence of the effectiveness of this scheme in India. Using a propensity score-matching with difference-in-difference (PSM-DiD) model, a firm-level panel data analysis across two industrial sectors over 11 years (2005–2015) reveals the average treatment effect of PAT on targeted enterprises. PAT Cycle-1 decreased the designated consumers’ energy intensity by 15% in the textile sector. Nevertheless, the scheme could not considerably lower the energy intensity of the iron & steel sector. Another important finding is that energy intensity is declining among older, export-intensive firms. Accordingly, the study recommends enhancing export intensity in the textile and iron & steel sectors as a viable pathway to curbing emission intensity, with estimated reductions of 44.7% and 30%, respectively.