Context:

Gujarat became the world’s first market for particulate matter emissions in the world after 155 industrial units of Surat came together for “live trading” under the Emissions Trading Scheme (ETS).

About

• The program 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 cap.
• 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 together.
• Then, a set of permits is created, each of which allows a certain amount of pollution, and the total is equal to the cap.
• These permits are the quantity that is bought and sold. 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).
• Being initiated in Surat by the Gujarat Pollution Control Board (GPCB), the emission trading scheme (ETS) 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 from The Abdul LatifJameel Poverty Action Lab (J-PAL).

Significance

• It is the first in the world to regulate particulate air pollution, which is the single greatest threat to human health globally, the state government said.
• It kicks off a new era of cleaner production while lowering industry compliance costs and rewarding plants that cut pollution in low-cost ways.
• It will prove that rapid economic growth, ease of doing business, and breathing clean air can all be achieved at the same time.
• It has the potential to create lasting changes for the people living in this state, as well as become a benchmark for other states in India and countries across the world