News : India to launch pilot air pollution trading market in Gujarat, Tamil Nadu
The MoEF has launched a concept note on the possibility of establishing a local emission trading scheme for air pollution. The purpose of the ETS is assumed to be the reduction of emissions of some conventional air pollutant, such as SO2, NOX or SPM, for the betterment of human health and the reduction of compliance costs.
The MoEF will be looking to setup an ETS into practice to reduce pollution emissions in Gujarat and Tamil Nadu first and the ministry will shortly begin dialogue with the Gujarat Pollution Control Board and Tamil Nadu Pollution Control Board to understand their goals, past data and capabilities with respect to local air pollution.
The concept note suggests that with current technology continuous monitoring is costly but generally accurate for a range of pollutants, including SO2, NOX and to a somewhat lesser extent, particulate matter.
The concept note suggests that India may also benefit by tying the system for local emissions trading to global emissions trading schemes for carbon dioxide.
However, while Sox and NOx trading are not linked to GHG trading, the introduction of this Trading Pilot Scheme can serve as a model for future environmental regulation in India and also position industry to benefit from potential tie-ups to global emissions trading schemes, as for carbon dioxide. Introducing emissions trading would make India a clear leader in environmental regulation amongst emerging economies.
Market based schemes lower compliance cost and provide a powerful, flexible tool to respond to a wide range of pollution problems. A successful cap-and-trade system will have the additional benefit of allowing India to easily receive payments for the contribution of its environmental regulations to reducing greenhousegas emissions, says the paper.
Gujarat and Tamil Nadu contain critically polluted areas with many large industries that would be suitable for an emissions trading pilot.
TNPCB, moreover, has already begun a continuous emissions monitoring program, one of the prerequisites for emissions trading. The outcome of this dialogue will be a clear working plan to implement emissions trading.
Experience with market trading has suggested that costs under the permit scheme will be lower than under traditional regulation.
The important questions that the Ministry will need to address to provide a framework for emissions trading are:
- What legal changes are necessary in order for units to be subject to pollution permits, rather than existing emissions norms?
- How will the permits be allocated and what will be the legal rights and obligations of permit holders?
- Who will bear the costs for monitoring equipment and of central resources, such as software for tracking emissions and trades? This expense could be funded from the auctioning of some share of permits.
- What are the national goals of this program? How will city- or state-level programs be integrated in the future to create more robust markets?