A new study found that the world’s first market for trading in particulate matter emissions, launched in Gujarat’s Surat, delivered both environmental and economic benefits. The programme lowered industrial pollution, slashed abatement costs for plants and improved compliance with environmental regulations.

Published in the May 2025 issue of The Quarterly Journal of Economics and released on April 15, 2025 , the study evaluated the emissions trading scheme (ETS), a cap-and-trade system for particulate pollution. The programme, operational for over five years, was the first of its kind globally for particulate matter and India’s first pollution trading scheme of any kind.

Using a randomised controlled trial in Surat — a major industrial hub — researchers found that the market-based programme reduced particulate emissions by 20 to 30 per cent. Pollution abatement costs dropped by over 10 per cent, and compliance with environmental laws rose to 99 per cent among participating plants.

Air pollution remains one of the gravest public health risks in India, with some research suggesting the average Indian loses over 5 years of their life expectancy due to air pollution exposure.

What is cap-and-trade?

The Surat ETS is the world’s first particulate-emissions market and India’s first market for any pollutant. It was developed as a pilot by the Gujarat Pollution Control Board (GPCB), in collaboration with the Energy Policy Institute at the University of Chicago.

Under the programme, 318 large coal-using industrial plants were required to install Continuous Emissions Monitoring Systems (CEMS), allowing real-time tracking of particulate matter emissions. This marked a shift from the earlier system of periodic spot checks.