Vibrant carbon market, not tax, could rein in carbon emissions in India, says Yale University economist

The success of India’s evolving carbon market will depend critically on the choice of design features and the regulator’s ability to enforce them, Rohini Pande, Director of Economic Growth Centre at Yale University told ET.

The Henry Heinz II Economics Professor and winner of Infosys Prize 2022 in Social Sciences said the market could be a more effective means to curb carbon emissions than a tax on emissions, drawing on the learnings from her work with Surat’s particulate matter pollution market.
In Surat’s market, the Gujarat Pollution Control Board was the regulatory authority. “There is a system where, before the market is launched, participating firms post a hefty bond. If a firm does not hold sufficient permits for its emissions at the end of a compliance period, then the firm is penalised directly from the bond.” she said. A similar policy could be promising in the context of the upcoming carbon market.