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EPIC India News • April 22, 2026

Maharashtra announces India’s first sulphur dioxide pollution market

Maharashtra partners with Emissions Market Accelerator to launch a market-based approach to reduce the industry’s regulatory costs, which will lead to rapid economic growth and less air pollution.

The Government of Maharashtra has made a significant step towards achieving cleaner air and a stronger economy by announcing India’s first sulfur dioxide (SO2) pollution market. The announcement was made on World Earth Day in an event in Mumbai as Maharashtra Pollution Control Board (MPCB) launched mock trading for an emissions trading market for sulphur dioxide (SO2) – advancing a key expansion of India’s proven approach to reducing industrial emissions at a lower cost.

This pioneering market will be executed by MPCB in close collaboration with the Emissions Market Accelerator (EMA) team – a global initiative of the Energy Policy Institute at the University of Chicago (EPIC) and the Abdul Latif Jameel Poverty Action Lab (J-PAL) to scale emissions markets across the Global South.

Launching the initiative, Maharashtra’s Minister for Environment and Climate Change, Smt Pankaja Gopinath Munde said, “We need a scientific approach to addressing air pollution, and the Emission Trading Scheme for SO2 is a step in that direction. At the individual level too, we need to reduce consumption and embrace reuse and recycling.”

Regarding the collaboration, Shri. Siddhesh Ramdas Kadam, Chairman of MPCB stated, “India’s first SO2 market will not only reduce air pollution but will also serve as a unique example of integrating science with policy. We are eager to work closely with the Emissions Market Accelerator team to implement an evidence-based approach to address industrial pollution in the state.”

Prof Michael Greenstone, the Milton Friedman Distinguished Service Professor in Economics and Director of EPIC and Co-Chair of EMA said, “Maharashtra has been a pioneer at rolling out bold and trailblazing environmental initiatives. The introduction of a pollution market for SO2 reinforces this once again. We are thrilled to work with our government partners in ensuring that Maharashtra’s economic growth and environmental protection can go hand in hand.”

Greenstone, along with his colleagues Rohini Pande, Anant Sudarshan, and Nick Ryan, are working with the government of Maharashtra in rolling out this initiative.

The SO2 market is designed to effectively control pollution by enabling participating plants to trade emission permits. This incentivizes plants with lower costs of reducing SO2, to make substantial reductions and sell permits to others facing more expensive pollution reduction processes.

The launch of this pilot follows years of work by the MPCB, which has established a mechanism to ensure the availability of accurate emission data for policymaking.

Earlier, the Department of Environment and Climate Change, Government of Maharashtra and MPCB signed a Memorandum of Understanding with the University of Chicago Trust and J-PAL South Asia to address industrial air pollution in Maharashtra. The Department had also issued a government resolution stating the implementation of a pilot project of the emissions market for sulphur dioxide for select industries in Maharashtra.

Professor Rohini Pande, one of the researchers on this project, commented, “This is a revolutionary initiative by the Government of Maharashtra to improve air quality. It is the result of years of infrastructure development and advocating the integration of high-quality evidence to design policies that can have a lasting impact on people’s lives. We are very excited to be working with our government partners to roll out this pilot program.”

Balaji Srinivasan, Co-Chair of EMA, who has played a key role in coordinating this initiative, shared insights from international experiences. He stated, “There is a lot of evidence indicating the potential of an SOx market in reducing pollution. In the United States, it cut pollution by 91%. So, other countries and Indian states are looking to the Maharashtra SO2 pollution market with enormous hope.”

The proposed pilot in Maharashtra builds on the successful implementation of the world’s first particulate (PM2.5) pollution market in Surat, Gujarat, which launched in 2019. Members of the EMA Scientific Advisory Council – Michael Greenstone, Rohini Pande, Nicholas Ryan and Anant Sudarshan – collaborated with the Gujarat Pollution Control Board on this initiative. The research experiment in Surat demonstrated that air pollution can be reduced while also reducing compliance costs. The success in Gujarat led to the creation of EMA, which is now helping to expand emissions markets in four Indian states and is discussing the prospects of additional markets internationally.