The industrial city of Surat succeeded in reducing its air pollution loads — by experimenting with the rules.

India is among the most polluted countries in the world, with transport, industrial emissions, and biomass burning as some of the leading causes. The responsibility of enforcing air pollution norms falls on the state and central pollution control boards (PCBs), who have the power to set emission and effluent standards and test them.

In Surat, an experiment with changing the regulatory framework yielded better results in controlling air pollution than before. The Gujarat Pollution Control Board collaborated with researchers affiliated with the Energy Policy Institute at the University of Chicago’s India program (EPIC) to set up an emissions trading system (ETS), giving polluting industries the chance to buy and sell permits to pollute, with the aim of driving down pollution.

“An emissions trading system replaces a fixed limit on emissions per plant with a cap on the total amount of pollution reaching the atmosphere by a group of factories, while allowing them to reallocate and redistribute that pollution amongst themselves, by trading permits,” explained Anant Sudarshan, a faculty member at the Department of Economics at the University of Warwick and a co-author of the study. “The benefit of this is it can bring costs down significantly, because it creates an incentive to over achieve. So, plants that are able to over achieve have an incentive to do that because they can then sell permits to plants for whom it is very difficult to cut pollution,” he added.

Industrial plants participating in the ETS collectively reduced emissions of particulate matter — particles that make up air pollution — by 20-30% compared to those that didn’t, the study found. It also found that the regulator — the Gujarat Pollution Control Board — was able to penalise erring plants more effectively under the ETS, since enforcement was swift and “a nondiscretionary rule for fines proportional to permit shortfalls made strict enforcement credible,” said the study.