International Journal of Environmental Science and Development

Abstract—India launched the Perform-Achieve-Trade (PAT) scheme for firms in the eight most energy intensive industries in 2007. The purpose was to induce efficient use of energy through trade in Energy Saving Certificates. The scheme identified the most polluting firms from each of these industries and set individual energy intensity reduction targets. The first PAT cycle runs from 2012-2015 and targets have to be met within this period. This is the first time India has adopted tradable permit scheme for dealing with an environmental problem. The objective of this paper is to quantify the PAT effect for two out of the eight identified industries viz. Cement and Pulp & Paper industries. The paper uses difference-in-differences to estimate the energy intensity of firms in the implementation years. The technique of difference-in- difference-in-differences is used to get even more robust results. Finally an OLS model is estimated to include other factors that influence the energy intensity of firms from these two industries. The paper finds PAT did not have a significant impact on the average energy intensity, but the coefficient of triple interaction term is significantly negative. All other explanatory variable shave the expected signs.

Index Terms—Cement industry, energy intensity, India, perform achieve and trade, pulp & paper industry, tradable permits.

Hena Oak is with the Department of Economics, Miranda House, University of Delhi, India (e-mail: henaoak@gmail.com).

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Cite: Hena Oak, "Measuring Perform-Achieve-Trade: Analysis of Indian Cement and Pulp & Paper Industries," International Journal of Environmental Science and Development vol. 8, no. 12, pp. 809-814, 2017.