India has implemented a pioneering solution to address air pollution the world’s first particulate emission trading scheme (ETS). Initiated in Gujarat, this market-based program has led to a 20–30% reduction in emissions from coal-burning industries since its launch in 2019, while also reducing pollution control costs by over 10%.
A new market for cleaner air
The pilot scheme was developed through a collaboration between leading economists and the Gujarat Pollution Control Board. It functions on a cap-and-trade model, where industries are assigned pollution limits and can buy or sell emission permits based on their performance. This incentivizes companies to lower their emissions and save costs, creating a dynamic balance between environmental regulation and economic efficiency.
Surat one of Gujarat’s industrial hubs, became the testing ground for this initiative. It now hosts the world’s first particulate matter trading market, designed specifically to regulate and reduce emissions of harmful particles that contribute to respiratory illnesses and environmental degradation.
How the scheme works
Under the ETS, real-time monitoring is conducted using Continuous Emissions Monitoring Systems (CEMS), which track pollutants discharged by each plant. Industries trade their emission allowances via a platform developed by the National Commodities and Derivatives Exchange e-Markets (NeML). If a plant pollutes less than its permitted limit, it can sell its unused quota; if it exceeds the cap, it must buy extra permits or face penalties.
Moreover plants are required to submit Environmental Damage Compensation, a fee proportionate to their size and pollution load, ensuring accountability under the “polluter pays” principle.
Beyond Gujarat: a model for the world?
While ETS has proven cost-effective and enforceable, experts warn against relying solely on market-based tools. Some environmentalists argue that ETS should complement, not replace, strict regulations and pollution control technologies. The success of the Gujarat model hinges on strong institutional support and consistent monitoring conditions not yet available in many developing regions.
StillIndia’s achievement marks a historic turning point in environmental governance, offering a replicable framework for other regions facing chronic air pollution. With over 1.4 billion people impacted by toxic air, scalable innovations like these could be key to breathing cleaner healthier air in the future.