The Energy conservation Bill was introduced in the Lok Sabha in February 2000. The Bill was subsequently passed by both the houses of the Parliament and finally received the assent of the President in September 2001. The Energy Conservation Act thus became effective from 1st March 2002. The Act is spread over 22 pages and divided into 10 chapters. The Act aims to promote efficient use of energy resources amid the enormous use of the various energy sources in the various sectors of the society. The state, identifying the need to constitute a statutory authority to achieve this objective, has established the Bureau of Energy Efficiency (Bureau) under the said Act. The concept of energy conservation is not new in India. The state has from time immemorial weighed up its utmost attention to the conservation and effective use of energy. Earlier in 1981 the Ministry of Power and irrigation had constituted an inter-ministerial working group, which submitted its report in 1984 on initiating a more efficient use of energy across the nation. Subsequently, an energy conservation wing was created in the Department of Power. The same was followed by a series of proposals to establish an authority to ensure this effective use, including the proposal by the Working group constituted by the Ministry power in 1994, and culminated in the introduction of the Energy Conservation Bill in the Parliament.

The Energy Conservation Act extends to the whole of India except Jammu and Kashmir. Chapter IV of the statute deals with the powers and functions of the Bureau. Section 14 states that the Bureau is instituted to provide leadership for improvement of energy efficiency in all sectors of the economy. The Bureau thus shall take suitable steps to prescribe guidelines for this purpose. The main duty of the Bureau is to recommend to the Central Government the norms and processes and energy consumption standards. The Bureau shall also specify the norms for processes and energy standards for any equipment, appliances which consume, generate, transmit or supply energy.

Chapter V and VI of the Act provides for the powers of the Central and the State Government respectively to enforce efficient use of Energy and its conservation. The power however can be exercised only in consultation with the Bureau. Section 26 of the principal Act further specifies that, the penalties in cases where the person fails to comply with the provisions of the Act, shall not exceed Rupees Ten Thousand for each such failure and in case of continuing failures an additional penalty of Rupees One Thousand for every such day. Section 27 enunciates that for the purpose of adjudication on the said penalty under section 26, the state government may appoint any of its members to be the adjudicating officer. The officer while adjudicating on the issue shall comply with the principles of natural justice. Section 30 further imposes a duty on the central government to establish an appellate tribunal. It is pertinent to note that the Civil Court has no jurisdiction to entertain any suit or proceedings on a matter over which the adjudicating officer or the appellate tribunal has jurisdiction. Any such suit is liable to be dismissed thereof. The Act was recently amended in 2010 vide the Energy Conservation (Amendment) Act, 2010. The Act in addition to omitting various provisions thereto has amended Section 26 to widen the extent of the penalty to Rupees Ten Lakhs. Furthermore Sections 14-A and 14-B were inserted specifying the power of the Central Government to issue energy saving certificate to the consumer whose energy consumption is less than the prescribed norms and standards and the power of the Central government, after consulting the Bureau, to specify the value of per metric ton of oil equivalent of energy consumed for the purposes of this Act.

Various studies undertaken on the subject of energy consumption across the globe indicate that India has a huge scope for energy saving. Studies have proven that the countries with high energy intensity may be less competitive in the global market due to the high energy input cost. Thus the enactment provides for a much required institutionalization of the concept of energy efficiency in the country and helps reduce the energy consumption to a great extent.