cap-and-trade Current Affairs - 2020

Quick Facts: Emissions Trading Scheme (ETS) of Gujarat

The Gujarat government has launched country’s first ‘Emissions Trading Scheme (ETS)’ which is being described as world’s first market for trading in Particulate Matter (PM) emissions. ETS was launched in Surat ETS) to encourage and incentivize the industrial units to cut air pollution.

Even though trading mechanisms for pollution control do exist in many parts of world but none of them is for PM emissions.

What is Emissions Trading Scheme (ETS)?

It is a regulatory tool that is aimed at reducing the pollution load in an area and at the same time minimising the cost of compliance for the industry. ETS is a market in which traded commodity is particulate matter emissions.

The Gujarat Pollution Control Board (GPCB) sets a cap on total emission load from all industries. Thereby, various industries can buy and sell the ability to emit particulate matter, by trading permits (in kilograms) under this cap and for this reason ETS is also called as a cap-and-trade market.

Functioning of ETS: Under the cap-and-trade market, the GPCB will first define the total mass of pollution that can be released into air over a certain fixed period by all industrial units or factories collectively. This will be equivalent to the cap (or limit) and the permits would then become units which could be bought and sold between traders under the ETS.

Why launched in Surat? Since Surat is a densely-populated industrial centre and textiles and dyeing houses there produce heavy air pollution. Also, industries in Surat had already installed Continuous Emission Monitoring Systems that makes it possible to estimate the mass of PM being released.