India possesses the unenviable distinction of having the second worst air quality of any country in the world. This is not just a Delhi, urban, or North Indian problem—a staggering 84 per cent of the population breathes air that does not meet national standards. The effect is that the life expectancy of the average Indian is reduced by over five years on average from breathing dirty air.

The aftermath of the COVID-19 pandemic has made it more urgent than ever that we find different ways to clean the air, while also encouraging equitable economic growth.  We suggest an important part of the solution could be a national cap-and-trade market to regulate sulphur dioxide (SO2) emissions from large industry and power-plants.

Why would regulating SO2 help? The single most important air pollutant in India is fine particulate matter (PM 2.5) which enters the air in two ways. The first is direct emission of particles created by burning fuels and crop-residue; construction activity; road dust etc. The second is indirectly, when other chemicals such as SO2 and nitrogen dioxide (NO2) react in the air to produce fine particles. About 30 per cent of PM 2.5 pollution across India is created this way, with the amount varying by loc­ation and season, sometimes as high as 70 per cent. Further, SO2 and NO2 can travel and turn into fine particles over many hundreds of kilometers, far from where they are emitted. This means they require national-level policy solutions.

Yet even though indirect particles are so important, they have generally not been targeted by policymakers and the result is predictable. India is the largest emitter of SO2 in the world, producing roughly 15 per cent of global emissions, almost entirely from the power and industry sector. Our power plants create roughly 80 per cent more SO2 per unit electricity than in China (countries like the United States are even cleaner). Even so, the Central Pollution Control Board has been forced to repeatedly extend compliance deadlines and relax limits in the face of consistent opposition by the power sector.