Niti Aayog is zeroing in on a “cap and trade” scheme┬áto control air pollution rom industries. This will involve a market for industries to buy and sell permits that allow them to emit a certain amount of particulate matter (PM 2.5).

Many such schemes for local pollutants like sulphur dioxide (SO2) and oxides of nitrogen (NOx) have already been implemented in the US like the Acid Rain Programme of 1995.

Energy Policy Institute at the University of Chicago is conducting a feasibility study and drafting the policy for Niti Aayog. According to EPIC-India, such a scheme can be implemented in any industrial cluster or a city with a number of industries like those in NCR, which have a direct impact on pollution levels in Delhi.

The scheme works like this: Central Pollution Control Board (CPCB) sets a cap on total emissions of PM 2.5 from industries in a city. This can be the total load of PM 2.5 in the form of, say kg/hour. Each industry is issued permits on the basis of how much of PM 2.5 emissions they can reduce. Some industries may be able to bring down their emission level even lower than the permits allotted to them, while some may find it difficult and expensive to meet the limits based on permits. Those who have over-achieved their emission reduction targets can sell their excess permits to industries, which are unable to meet the requirements. Such trading can be intermediated through a stock exchange.

According to EPIC researchers, some industries will find it cheaper to meet the emission cap by investing in technology upgradation but others like power plants may find it expensive and difficult to meet the targets. “This scheme can bridge the gap between environmental regulation and economic growth. It can also make the emissions from industries significantly transparent. This is one of the cheapest methods of reducing emissions from industries. Besides, there will be additional advantages in terms of reducing other pollutants because to reduce PM 2.5 emissions, most industries will have to change their fuel,” said Anant Sudarshan, India director at EPIC…