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| India to launch emission trading to check industrial pollution | | | AGENCIES
New Delhi, Sep 4 : India will soon start a market-based emission trading system to check industrial pollution, government says.
The system will allow auctioning of pollution permits to industries under an Emissions Trading System (ETS) for air pollution. An industry reducing pollution beyond a cap can sell these permits to others.
The Environment Ministry has decided on the innovative concept based on a discussion paper prepared for the Ministry by a team from Massachusetts Institute of Technology (MIT) and Harvard University.
The study claims the system will lower pollution levels even while reducing the overall costs of compliance.
The proposed system involves regulator setting a pollution cap, aggregate as also for individual units, and let industries trade permits by ensuring low pollution self-regulation.
Gujarat and Tamil Nadu have been selected for launching the pilot as these states have critically polluted areas with many large industries.
The project requires real-time emission monitoring, which is the starting point for a market-based system.
The 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 such as carbon trading.
The implementation of the scheme will require changes in the existing legal system of pollution regulation to enable emissions trading.
The process of operationalising the emission trading system will start once online monitoring takes off in the country.
Commending the study, Environment Minister Jairam Ramesh says the final goal is to have robust regulations but with lesser regulators. The proposed system seeks to go beyond the command-and-control ''inspector Raj'' system, he added.
The discussion paper says the scheme provides for the regulator to set the overall amount of emissions but without deciding what any particular source will emit. Industrial plants and other polluters, rather than being told a fixed emission limit, pay a price for their emissions and choose how much to emit, within reasonable limits, taking this price into account.
The price of emissions makes pollution costly and gives polluters an incentive to cut back. The scheme involves setting the cap with reasonable prices and emission reductions, allocation of permits, continuous monitoring and compliance that makes industries confident that buying permits is the only reliable way to meet environmental obligations.
The paper says introduction of emissions trading would position India as a clear leader in environmental regulation among emerging economies and the benefit will extend beyond the immediate goal of achieving compliance at a lower cost to society.
''Having a trading scheme in place will make it easier to adjust regulation as environmental goals change. Tighter environmental standards can be achieved with a drop in the level of the cap, which would raise the price of emissions permits and give incentives to pollute less, rather than abruptly throwing certain areas or sources out of compliance,'' says the paper.
Auctioning of the permits will also yield revenue for implementing regulations, besides ensuring that firms responsible for emissions bear the full cost of their emissions. The scheme will provide for the exact nature of the permit and how the permit holdings of participants will be tracked, besides the unit of pollution that a permit represents and the period of its validity.
The permit should be a commodity with a value that industry can easily measure to encourage trading, adds the paper, pointing out as a benchmark, the US example of a permit being equivalent to 1 tonne of sulphur dioxide.
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