New Emissions Trading Scheme will help to reduce air pollution in India

The government of Punjab, India, is launching a new Emissions Trading Scheme (ETS) to tackle industrial air pollution. 

ETS offers a market-based approach to reduce air pollution by allowing governments to set a cap on emission levels and distribute permits to firms.

The approach uses continuous emissions monitoring systems (cems) to send real-time and continuous readings of particulate matter (PM2.5) emissions.

To begin with, the ETS will regulate emissions from 200 dyeing industries in Ludhiana.

A randomized study conducted by J-PAL South Asia across 350 highly polluting industries in Surat, Gujarat, found evidence that the ETS offers a mechanism for improving air quality in a transparent and predictable way.

The Government of Punjab will work with J-PAL South Asia and EPIC India to design and establish pollution markets in Punjab.

Shri Alok Shekhar, IAS principal secretary industries & commerce, said: ‘The Government of Punjab is keen to combat environmental pollution through regulation that promises a win-win situation of cleaner production, coupled with lower compliance costs for industries. ETS is one such initiative that can help regulate critically and severely polluted industrial belts in Punjab.’

Professor Michael Greenstone, director of EPIC and co-chair of Energy, Environment, and Climate Change of J-PAL added,: ‘Pollution reductions can be delivered – the world’s first ETS for particulate pollution in Gujarat has already shown this.

‘Punjab is now becoming the second Indian state to adopt this pioneering vision. For various other Indian cities battling polluted air and expensive regulations, ETS has the potential to improve air quality and health, reduce the regulatory burden on industries, and decrease government enforcement expenditures.’

This initiative is part of an ongoing partnership between the Government of Punjab and J-PAL South Asia, wherein since 2017, J-PAL South Asia has worked with state departments to facilitate rigorous, policy-relevant research and the scale-up of successful programmes.

Photo Credit – Himanshu Choudhary


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