The State of Gujarat in India has pioneered the world’s first trading scheme for particulate emissions, that lets businesses keep growing while providing clean, healthier air for its citizens.
The industrialisation of cities can lead to more job opportunities and a thriving economy. But the flip side to this growth is that people who live in the area often have to breathe highly polluted air, causing serious medical conditions and even premature death.
This is a situation that’s existed around the world since the dawn of the Industrial Revolution. Now Gujarat, a major state located in western India and a global economic success story, is facing this same challenge. With its rapid economic growth has come high levels of dangerous particulate matter in the air.
Traditional regulation to limit emissions can be costly and hindered by red tape, making it difficult for public authorities to deliver cleaner air for their citizens without undermining economic growth.
Faced with this problem, policymakers in Gujarat chose a new approach that would reduce pollution and protect public health while still allowing industry to prosper.
The State of Gujarat’s solution is simple but highly effective. Their pioneering Emissions Trading Scheme places strict limits on particulate matter emissions per factory, backed by a total cap across industrial hubs that ensures Gujarat keeps control of its overall limits.
A cap-and-trade approach means the scheme financially incentives businesses to cut emissions and lower air pollution. If they emit less than their individual limit, they are allowed to trade their unused quota with other businesses that need more.
In this way, firms can make decisions about their own activities while contributing to collective progress. The flexible market-based nature of the scheme helps to reduce overall emissions at a higher rate and lower cost than traditional regulation, all while allowing business to continue thriving.
The scheme was piloted with resounding success in Surat, a major commercial zone and home to over 18 million people, with research showing particulate emissions were cut by 20-30% while industry profits increased. Ahmedabad, GX’s largest city, has recently followed suit, and there are ongoing discussions to roll it out across India, the world’s most populated country.
The scheme is now regarded as gold-standard evidence that emissions trading is not only environmentally and economically beneficial, but it can succeed in tackling the severe pollution challenges faced by rapidly developing economies in the Global South.
Becoming an Earthshot Prize Finalist is a proud milestone for the Gujarat Pollution Control Board and the Emissions Market Accelerator. It is an international recognition of a solution born in Gujarat that has the potential to transform how the world addresses industrial pollution.
The international platform provided by The Earthshot Prize will help us show that emissions trading can deliver cleaner air without hindering growth, so other emerging economies worldwide to follow India’s lead.
