GS3 – Environment
Context:
The Emission Trading Scheme (ETS) launched in Surat, Gujarat, has shown how market-based tools can successfully curb particulate matter (PM) pollution, based on results observed from 2019 to 2021.
Overview of Surat ETS
- Launched in 2019, the Surat ETS is the first emissions trading market globally designed specifically to control particulate matter pollution through a Cap-and-Trade system—similar to models used in carbon trading.
- The initiative targets industrial emissions, which are responsible for roughly one-third of the PM pollution in the city.
Implementation and Monitoring
- Trading activities are carried out on the NeML platform (National Commodities and Derivatives Exchange e-Markets Ltd).
- The scheme is overseen by the Gujarat Pollution Control Board (GPCB).
- It involves collaboration with leading institutions such as:
- EPIC India (University of Chicago),
- Yale University,
- J-PAL South Asia,
- Various industry associations.
- Continuous Emission Monitoring Systems (CEMS) have been installed in participating industries to enable real-time tracking of emissions.
Understanding Carbon Trading Mechanisms
- Emission Trading (Cap-and-Trade):
- A regulatory framework where carbon emissions are capped.
- Emission permits are allocated based on historical data and capacity.
- Entities with surplus permits can trade them with those exceeding their emission limits.
- Non-compliance leads to penalties or fines.
- Offset Trading (Baseline-and-Credit):
- Organizations earn carbon credits by supporting projects that reduce or capture emissions.
- Helps entities meet emission targets when direct reductions are not practical.
- Carbon Credit Trading:
- One carbon credit equals one tonne of CO₂ (or equivalent GHG) reduced or removed.
- These credits can be traded to help other entities offset their emissions.
Other Tradable Units in the Carbon Market
- RMU (Removal Unit): Generated through activities like reforestation.
- ERU (Emission Reduction Unit): Produced under joint implementation projects.
- CER (Certified Emission Reduction): Created from clean development mechanism (CDM) projects.