Gujarat's Emissions Trading Scheme: A Model for Effective Pollution Control

Gujarat's emissions trading scheme led to a 20-30% drop in industrial particulate pollution, cutting compliance costs by 11% and promoting near-total legal compliance. The success, highlighted in the Quarterly Journal of Economics, proves such markets can thrive even with low regulatory capacity, offering scalable solutions for India’s air quality challenges.

Gujarat's innovative emissions trading scheme (ETS) has successfully slashed industrial particulate pollution by 20-30%, according to a groundbreaking study published in the Quarterly Journal of Economics. The ETS not only reduced pollution but also cut costs by 11% and ensured nearly 100% legal compliance among participating industries.

The scheme, tested over five years on 317 coal-burning plants in Surat, demonstrated a 'win-win-win' scenario for the environment, industry, and regulators, according to Michael Greenstone of the University of Chicago. Skepticism was high, but the market's success has now sparked interest across India.

Following its success, the Gujarat government has expanded the program and inspired other states to consider similar initiatives. With India facing severe air quality issues, this ETS offers a practical solution without hindering economic growth, proving that pollution markets can excel even in low-regulatory settings.

(With inputs from agencies.)