INDIA’S FIRST EMISSION TRADING SCHEME
Why in News?
- Gujarat has launched India’s first trading programme to combat particulate air pollution on World Environment Day 2019, which has air pollution as its theme.
Gujarat Emission Trading Scheme (ETS):
- The programme is a market-based system where the government sets a cap on emissions and allows industries to buy and sell permits to stay below the
- It is initiated by the Gujarat Pollution Control Board (GPCB).
- It was designed with the help of a team of researchers from the Energy Policy Institute at the University of Chicago (EPIC), the Economic Growth Center at Yale University and others.
Using Cap and Trade system:
- The government has set a cap on concentration of emissions for each industrial unit at 150 microgramme per cubic metre (ug/m3), which is the 24-hour average for emission standard set by the Central government for industrial
- Globally, cap-and-trade systems have been used to reduce other forms of pollution, such as programmes that have successfully reduced sulphur dioxide (SO2) and nitrogen oxides (NOx) in the
- But the Gujarat programme is the first in the world to regulate particulate air
How actual trading happens?
- Under the cap and trade system, the regulator first defines the total mass of pollution that can be put into the air over a defined period by all factories put
- Then, a set of permits is created, each of which allows a certain amount of pollution, and the total is equal to the
- These permits are the quantity that is bought and
- Each factory is allocated a share of these permits (this could be equal or based on size or some other rule).
- After this, plants can trade permits with each other, just like any other commodity on the National Commodity and Derivatives Exchange Limited (NCDEX).
Benefits of ETS:
- The reason for trading is that in a cap and trade market, the regulator will measure pollution over a period of time and industries must own enough permits to cover their total
- Factories who find it very expensive to reduce pollution, will seek to buy more
- Those who can easily reduce pollution are encouraged to do so because then they have excess permits to
- Eventually, after buying and selling by plants that find it cheap to cut pollution and those for whom it is expensive, most pollution is taken care
- Whatever the final allocation, the total number of permits does not change so the total pollution is still equal to the predefined cap. And yet the costs to industry are
- Under existing regulations, every industry has to meet a certain maximum concentration of pollutants when it is
- They are tested occasionally and manually (one or two times a year). However, there is widespread non-compliance across
- This is partly because penalties are rarely applied, in large part because they involve punishments such as closing down the entire plant which is not necessarily appropriate for small violations.
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