By Nikhil Ghanekar
The world’s first-ever market for trading in particulate matter emissions—launched in Gujarat’s Surat in 2019 through partnerships with the University of Chicago, Yale University, and the Abdul Latif Jameel Poverty Action Lab (J-PAL)—has reduced pollution by 20-30% among participating industries while lowering their compliance costs, according to a recent study published in The Quarterly Journal of Economics.
The Surat Emission Trading Scheme (ETS) seeks to curb air pollution by allowing plants to buy and sell permits for particulate matter emissions to stay within a fixed pollution limit. Each plant is given a limit on how much it can pollute. Those that stay within the limit can sell their unused permits to others that exceed theirs. This approach, known globally as a cap-and-trade system, has been used in Europe for greenhouse gases and in China for carbon emissions.
The Surat ETS is run by the Gujarat Pollution Control Board (GPCB) in collaboration with the Energy Policy Institute at the University of Chicago (EPIC), J-PAL, and industry associations. Surat was chosen for the pilot market as it is a highly industrialised city where industrial pollution contributes nearly a third of the ambient particulate matter, the study notes.