School of Humanities & Social Sciences, Indian Institute of Technology, Indore, Madhya Pradesh, India
Several climate initiatives have been implemented to improve energy efficiency in industries. The Perform, Achieve, and Trade (PAT) initiative was implemented in India in 2012 to provide financial incentives to reduce energy intensity cost-effectively. This study offers a thorough analysis of the impact of the PAT scheme on the energy-intensive and potentially energy-efficient textile sector. Employing data for the period 2002-2022 and using a two-way fixed effects model utilizing Driscoll-Kray standard errors to account for heterogeneity in the data, it has been determined that energy intensity in the textile sector has decreased by 3.9% following the implementation of the PAT scheme. Due to the heavy presence of small- and medium-scale firms in the textile industry, difficulties arise in adopting energy-efficient technologies. In the findings, the energy-saving targets set in the scheme are insufficient to radically reduce carbon emissions.
⓿ The energy targets set for firms constitute only 6% of their total energy consumption.
⓿ The implementation of the PAT scheme resulted in a modest 3.9% reduction in energy intensity.
⓿ Lenient energy-saving targets led to inadequate enforcement of compliance.
⓿ Ineffective monitoring and verification of firms pose challenges in assessing the scheme’s impact.
PAT scheme, Textile, Fixed Effect, Energy Efficiency, Energy Consumption
