Surat’s Emissions Trading Scheme Cuts Industrial Pollution by Up to 30%, Sets Model for India

(Source – Indian Express, Section – Explained, Page – 14)

Analysis of the news:

Understanding Emissions Trading Schemes (ETS)

• ETS is a market-based mechanism designed to reduce emissions by capping the total allowed output and issuing tradable permits.

• Industries can buy or sell permits based on their emissions, incentivising cleaner technology and efficient pollution control.

• This ‘cap-and-trade’ approach provides economic flexibility while driving environmental compliance.

Implementation of the Surat ETS

• Launched in 2019, the Surat ETS focused on reducing fine particulate matter from 342 polluting textile units.

• The cap was initially set at 280 tons/month and later reduced to 170 tons. Plants received 80% of permits free and the rest through auctions.

• Trading occurred within a regulated price band (₹5–₹100 per kg) to prevent misuse or market distortion.

Compliance and Enforcement Mechanism

• The ETS enforced strict compliance through a bond-backed penalty system, where violators paid twice the ceiling price per excess emission unit.

• This ensured strong deterrence while allowing plants to adjust through a grace period known as the “true-up” phase.

Why ETS is a Game-Changer for India

• India’s traditional command-and-control regulatory model is often inefficient due to its rigid enforcement and resource constraints.

• ETS introduces flexibility, cost-efficiency, and accountability, particularly benefiting small and medium enterprises.

• It marks a significant shift toward smart environmental governance.

Global and Domestic Challenges

• While ETS schemes have shown promise globally, they face criticisms like permit over-allocation, lobbying by polluters, and insufficient caps—issues seen in Europe, the US, and China.

• The Surat pilot avoids many pitfalls through data-backed caps and transparent monitoring, offering a scalable model for other Indian cities.