EMISSIONS TRADING SCHEME
Reducing industrial pollution by establishing emissions trading markets
Market-based environmental regulations have the potential to cut pollution at low cost (and potentially even increase profits), in areas where pollution levels remain persistently high. In 2022, based on results from a first-of-its-kind pilot study of an emissions market for particulate matter, the Gujarat Pollution Control Board built on Surat’s success and introduced a new market covering the largest manufacturers in the textile belt in the city of Ahmedabad - which includes 9.3 million people in its airshed.
Partners
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| Gujarat Pollution Control Board | EPIC India |
Globally, air pollution causes billions to live shorter, less healthy, and less productive lives. However, governments may hesitate to enforce mitigation policies, such as command and control policies, that they perceive to reduce pollution or emissions at the expense of economic development. An alternative approach is to create market-based mechanisms, which can improve air quality as well as spur economic growth.
With preliminary work beginning in 2012, a randomized evaluation was launched by the Gujarat Pollution Control Board (GPCB) in 2019, in close collaboration with J-PAL affiliated researchers, in Surat, to test the efficacy of the first emissions market for particulate matter in India.
Evidence-to-action story
RESEARCH
From a sample of about 320 solid fuel burning factories equipped with continuous emissions monitoring systems (CEMS)—devices that send live readings of particulate emissions—in Surat, half were chosen at random to participate in the emissions trading scheme, while the others remained under the status-quo command and control regulation.
RESULTS
Factories randomly assigned to participate in the market reduced their emissions by 20 to 30 percent compared to those that remained under the status quo command-and-control regime.
SCALE-UP
In May 2022, the Government of Gujarat launched the plan for expanding the scheme to other industrialized clusters in the state in partnership with the Energy Policy Institute at the University of Chicago (EPIC) India and J-PAL South Asia. Capacity building among factories in Ahmedabad began in 2022. J-PAL South Asia contributed to the design of the training portal developed by the government, and advised on process improvements. The first phase of trading started in 2023.
Point of contact
Gargi Pal
Senior Research Manager, J-PAL South Asia
[email protected]
Gargi Pal is a Senior Research Manager at J-PAL South Asia. She has worked on the Energy & Environment portfolio of projects, including the Information Disclosure project in Maharashtra, the Emissions Trading Scheme in Gujarat and the Smart Plugs project in Haryana.