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Gujarat Unveils emission trading scheme

Gujarat Unveils emission trading scheme

Tag:GS 3  || Environment || Climate Change || India & Climate Change

 Why in news?

  • Gujrat government launched the world first market first trading in particular matter emissions.
  • While trading mechanisms for pollution control do exist in many parts of the world, none of them is for particulate matter emissions.

About the emissions trading scheme:

  • It was launched in Surat, the emissions trading scheme (ETS) is a regulatory tool that is aimed at reducing the pollution load in the area and at the same time minimizing the cost of compliance for the industry.
  • Various industries can buy and sell the ability to emit particulate matter, by trading permits (in kilograms) under this cap.

 Why was the Surat district chosen for ETS?

  • In 2013, when the project was conceptualized, the PM10 level at air India building in Surat was 86 micrograms per cubic meter.
  • According to GPCB annual reports, pollution levels have been increases between 120-200%, with pm10 in 2018 reaching up to 261 ug/cu M.

 How the Trading Process does take place?

  • At the beginning of everyone’s month compliance period (during which one emission permit is valid), 80% of the total cap of 280 tones for that period is distributed free to all participant Units.
  • GPCB will offer the remaining 20% of the permits during the first auction of the compliances period at a floor of Rs 5 per kilogram.

 Auctions of trading process:

  • These take place on the ETS-PM trading platform hosted by the national commodities and derivatives exchange e-markets limited(NeML)
  • All participants must register a trading account.
  • These are two types of auctions.
  • For a true-up period of 2-7 days before the completion of the compliance period, units may continue to buy and sell any remaining permits at the final auction price to meet their compliance obligations.

 How many industrial units are participating in ETS?

  • Based on permits held by units at the close of the compliance and true-up periods units will be declared compliant or noncompliant.
  • Environmental damage compensation at Rs200/kg will be imposed for emissions in excess of a unit’s permit holding at the end of the compliance period.
  • To prevent any participant from hoarding permits, an upper limit has been— 5 times the initial allocation for the compliance period, or 3 percent of the market cap for the compliance period.
  • Also, no unit may sell more than 90% of its initial allocation.


  • These permits are not a way to allow industries to keep polluting
  • Purchasing permits is only an interim measure for many of these units who find it financially difficult to install air pollution control measures.
  • In other words, it helps buy some time and make investments later.
  • So the idea of this scheme is also to make sure that some units realize that it is cheaper to install APCM and reduce emissions rather than buy permits at a higher cost.

 Present status:

  • About 350 industries around Surat have installed continuous emissions monitoring systems and now transmit real-time, high-quality emissions data. The new scheme takes advantage of this technology’s modern, transparent approach to monitoring.

Advantage of ETS:

  • Help in improving life expectancy: this program is the first in the world to regulate particulate air pollution, which is the single greatest threat to human health globally and it will improve life expectancy and facilitate robust economic growth.
  • Role model for other states and world: The government claims this is the first such programme of its kind and will be a model for the rest of the country and the world.
  • Other benefits: The impact of particulate air pollution on life expectancy exceeds that of devastating communicable diseases such as tuberculosis and HIV/AIDS, behavioral killers like cigarette smoking, and even war, according to the Air Quality Life Index (AQLI) and We believe using this market-based system will prove that rapid economic growth, ease of doing business, and breathing clean air can all be achieved at the same time.


  • For effective and efficient pollution control, the emissions trading program will be experimentally tested to understand its impact on emissions, industry costs, and regulatory costs.
  • 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.