Ahmedabad, Gujarat, has taken a momentous step in curbing industrial emissions and pollution across the state by initiating an Emissions Trading Scheme (ETS) for particulate matter pollution. The live trading among 118 Ahmedabad industries in the scheme has commenced from  September 2023. The Hon’ble Minister of Forest & Environment, Government of Gujarat, Shri Mulubhai Bera while inaugurating the ETS Ahmedabad Live Market mentioned that   “Gujarat has been a flagbearer of taking innovative initiatives to ensure a balance between economic development and environment preservation. The Emissions Trading Scheme for Particulate Matter, the first in the world for PM emissions, is one of the examples of the unique initiatives being taken by the Government of Gujarat to contain its emissions.” Ahmedabad joins Surat as the second city in Gujarat to embrace ETS to improve air quality. The scheme empowers industries in the textile sector within the Narol and Vatva clusters.

Congratulating the team for this timely launch, GPCB Chairman Shri R B Barad said, “Beginning of trading in Ahmedabad’s pollution market is a watershed moment for us. This innovative market mechanism will help control the state’s industrial emissions and help citizens breathe clean air. Gujarat has always made progressive efforts to balance growth and environmental needs, and Ahmedabad’s emission trading scheme is one more giant step in that direction.”

Over the past five months, participating industries have actively taken part in mock trading exercises, acquainting themselves with the trading platform developed by NeML. This preparatory phase has enabled them to grasp the intricacies of online permit trading using virtual currency. The initial phase of the Ahmedabad ETS encompassed crucial activities, including installing and calibrating Continuous Emissions Monitoring System (CEMS) devices across participating industries, coupled with multiple workshops to simulate trading scenarios.

Prof Greenstone and his colleagues at the University of Chicago, Yale University, and the Abdul Latif Jameel Poverty Action Lab (J-PAL) South Asia have worked closely with GPCB for almost a decade and have been instrumental in designing and delivering the world’s first pollution market for particulate matter in Surat.

“The ETS pilot in Surat achieved the rare win-win of reducing industries’ costs and decreasing pollution emissions, fostering faster economic growth and clean air. So with the launch of trading in Ahmedabad’s pollution market, Gujarat has again taken another leap in advancing evidence-based policymaking that sets it apart internationally,” said Prof Michael Greenstone, the Milton Friedman Distinguished Service Professor in Economics at the University of Chicago and Director of EPIC. The Emission Trading Scheme is implemented by the Gujarat Pollution Control Board with the technical expertise of Dr. Michael Greenstone (University of Chicago), Dr. Rohini Pande (University of Yale), Dr. Anant Sudarshan (University of Warwick), Dr. Nicholas Ryan (University of Yale) along with the Abdul Latif Jameel Poverty Action Lab (J-PAL) and Energy Policy Institute Chicago.

The Honourable Principle Secretary, Forest and Environment Department, Govt of Gujarat, Shri Sanjeev Kumar IAS commented that  “ the State Pollution Control Boards are always making efforts to find sustainable solutions to address the issue of pollution.GPCB’s collaboration with leading research centers to introduce markets, backed by rigorous scientific research, has the potential to benefit the regulator, regulated and most importantly, the public”

A randomized evaluation led by Prof Greenstone and researchers affiliated with J-PAL found that ETS helped cut emissions by 20–30 percent in the plants participating in trading, has provided access to the real-time PM monitoring of plants through the use of continuous emissions monitoring systems, and did not increase the regulatory costs of participating plants. The program has the potential to transform the trade-off between environmental regulation and economic growth by lowering compliance costs for firms.

Shobhini Mukerji, Executive Director, J-PAL South Asia, said: “The expansion of ETS to Ahmedabad signals the Government of Gujarat’s strong commitment to sustainable growth. The success of ETS shows that through strong cross-sector partnerships with the government, industry, donors, academia, combined with their openness to innovation and rigorous testing, it is possible to design policy interventions that drive transformational change at scale.”

The decision to extend the ETS to Ahmedabad derives from the triumph of the ETS pilot in Surat, where evaluation showed that industries that were part of the scheme reduced pollution and did that without additional costs. The scheme in Surat that the Gujarat Pollution Control Board implemented is a first-of-its-kind effort to use markets to reduce pollution. The Emissions Trading Scheme is an innovative instrument for pollution regulation that has the potential to transform the trade-off between environmental quality and growth and improvement in air quality.