Imagine you have a factory that bellows out far more smoke and other poisonous fumes into the air than is permitted for the health of both the environment and the people who live nearby. But the factory near yours doesn’t produce as many pollutants. So you get to buy ‘credits’ from the lower-emission factory – essentially compensating for the extra pollutants you emit into the air.
This simple trade-based “pollution market” strategy – similar to carbon markets – could effectively reduce pollution levels far better than a top-down regulatory mechanism that penalises industries to ensure lower emissions, a recent study suggests.
Studying a five-year-old pilot programme that is ongoing in Gujarat, a team of scientists from universities, including Yale in the United States, found that a particulate matter pollution market in Surat reduced pollution by 20-30% while also reducing the pollution abatement costs of industrial plants by more than 10%.
However, these markets are still in their infancy. They cannot, in their current form, replace regulating pollution levels and penalising industries in India due to several reasons including the differences in old (and more-polluting) versus new (and less-polluting) technology that industries use, experts told The Wire.
Buying and selling carbon credits is now a type of trade; high-footprint entities can supposedly offset their emissions through the carbon-sequestering actions of another. The concept of a pollution market – also called an emissions trading scheme or cap-and-trade market – is similar. Industries that emit pollutants above a particular threshold can buy credits or ‘permits’ from other industries in the same area that emit far lower levels of pollutants.
15/05/2025