Earthshot Prize Names State of Gujarat a Finalist for Groundbreaking Work on Air Pollution

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The Earthshot Prize recognized the Emissions Market Accelerator (EMA)—a groundbreaking initiative that helps governments in the Global South design and implement market solutions to reduce pollution and foster economic growth—as the implementation partner of the Indian state of Gujarat, one of three Clean Our Air finalists for the 2025 award. 

The Emissions Market Accelerator is a joint initiative of J-PAL and the Energy Policy Institute at the University of Chicago (EPIC). EMA- and J-PAL-affiliated researchers worked with the Gujarat Pollution Control Board to design and deploy the world’s first cap-and-trade market for particulate pollution in the city of Surat. Through an experiment conducted by the researchers, the pilot market was found to have dramatically raised compliance with the law, sharply reduced particulate pollution, and increased industry profits. 

“The Gujarat Emissions Trading Scheme is an excellent testament to how financial market-based approaches can address severe pollution challenges in rapidly developing economies around the world,” says Jason Knauf LVO, Chief Executive of The Earthshot Prize.

Michael Greenstone, co-chair of the EMA and one of the researchers who led the Gujarat emissions market experiment, said, “We are beyond thrilled that the Earthshot Prize has recognized our partners in Gujarat and the Emissions Market Accelerator as a finalist for their prestigious award. For decades, emissions markets were seen as something that was almost exclusively a regulatory tool for the U.S., EU, and other rich countries."

He continued, "The Gujarat market serves as an important proof of concept that emissions markets can work beyond these regions. In fact, markets are uniquely well positioned to help countries where economic growth is an urgent priority and where much of the world’s pollution and greenhouse gas burden exists today.”

Forty-nine of the top 50 countries with the most polluted air are located in the Global South. Further 82 percent of CO2 emissions over the remainder of the century are projected to occur there. Yet, many of these countries haven’t had the tools to address these environmental burdens without compromising economic growth. Some, including India, have relied on command-and-control style regulatory approaches that are costly and difficult to enforce. By contrast, emissions markets are a flexible, transparent approach that allow for stronger compliance and greater pollution reductions at lower cost.

Greenstone and his colleagues Rohini Pande and Nicholas Ryan from Yale University and Anant Sudarshan from the University of Warwick, in collaboration with EPIC and J-PAL, worked with the Gujarat Pollution Control Board to set up the pilot market as an experiment, so the results from facilities participating in the market could be compared to a control group of facilities following existing, conventional air pollution rules.

The researchers’ study was published in a leading economics journal and found:

• Firms in the market reduced pollution by 20-30 percent more than those following the old rules.
• It cost industries in the market 11 percent less to comply, and their profits increased.
• The market reduced non-compliance from about a third of all plants at any point in time to less than 1 percent ever.

Of the results, Bala Srinivasan, co-chair of the EMA, said, “The market proved to be an important policy tool that is very much in line with the Government of India’s efforts to pursue environmentally-friendly economic policies. Gujarat opened the door to an entirely new way of approaching environmental and economic policies in emerging economies. With the Emissions Market Accelerator, we’re scaling up their trailblazing efforts.”

Following the success of the Surat market, the Gujarat government launched a second market in the city of Ahmedabad. Today, 20 million people are breathing cleaner air in Gujarat due to these markets. The EMA team is also working with the Gujarat government to establish a sulfur dioxide trading market and a wastewater pollution market.

“Becoming an Earthshot Prize Finalist is a proud milestone for the Gujarat Pollution Control Board and the Emissions Market Accelerator,” said Shri Devang M. Thaker, Member Secretary of the Gujarat Pollution Control Board. “It is an international recognition of a solution born in Gujarat that has the potential to transform how the world addresses industrial pollution. For us, this moment validates over a decade of commitment to building a regulatory system that is both innovative and practical—one that protects public health while enabling industries to thrive. The international platform provided by The Earthshot Prize will help us show that emissions trading can deliver cleaner air without hindering growth, so other emerging economies worldwide can follow India’s lead.”

Building on Gujarat’s momentum, the EMA team is now supporting a sulfur dioxide market in Maharashtra and is beginning to design a market in Rajasthan.  Discussions are also underway to expand to several other Indian states, as well as internationally.

“Gujarat’s leadership in testing and scaling emissions markets shows how governments in emerging economies can drive large-scale solutions that benefit people, the economy, and the planet,” said 2019 Nobel Prize in Economic Sciences winner Esther Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at MIT and co-founder and director of J-PAL. “J-PAL is proud to have worked alongside the Gujarat government and EPIC for more than a decade to pilot, evaluate, and scale this innovative approach and now through the Emissions Market Accelerator expand it further across India and other countries.”

The Earthshot Prize was launched by HRH Prince William in 2020 to identify, celebrate and back solutions to repair the planet. This year’s cohort were selected from nearly 2,500 nominees submitted by the Prize’s network of 575 nominators from 72 countries. The 15 finalists were chosen based on assessments done by The Earthshot Prize’s selection partners and Expert Advisory Panel, a global group of more than 100 subject-matter experts with deep backgrounds in conservation, science, technology, business, finance, academia and policy. 

The five winners of this year’s Prize will be selected by Prince William and fellow members of the prestigious Earthshot Prize Council, a diverse group of individuals dedicated to protecting the climate and our natural environment. The winners will be announced at an awards ceremony in Rio, Brazil, on November 5, 2025.

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