The Pollution Market: An Auction for Better Air Quality in West India – Think Global Health

Report on the Surat Emissions Trading Scheme and its Alignment with Sustainable Development Goals

Executive Summary

A pilot Emissions Trading Scheme (ETS) in Surat, India, has demonstrated a viable market-based solution to industrial air pollution, presenting a significant advancement toward achieving multiple Sustainable Development Goals (SDGs). The program successfully reduced harmful particulate matter emissions from textile factories while supporting economic growth, offering a scalable model for developing nations. This report analyzes the project’s methodology, outcomes, and challenges, with a specific focus on its contributions to SDG 3 (Good Health and Well-being), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 11 (Sustainable Cities and Communities), and SDG 17 (Partnerships for the Goals).

Program Overview and Methodology

In 2019, a partnership between international researchers and the Gujarat Pollution Control Board (GPCB) initiated an ETS to address severe particulate air pollution in the textile hub of Surat. This initiative was designed to overcome the failures of traditional command-and-control regulations.

Experimental Design

The project was structured as a randomized controlled trial involving 318 coal-burning textile units.

1. Approximately half of the units were assigned to the ETS market, while the remainder operated under existing regulations.
2. The ETS established a total cap on particulate matter (PM2.5 and PM10) emissions.
3. Factories were allocated a fixed number of emission permits, which could be bought or sold at weekly auctions, creating a market for pollution.
4. All participating factories were required to install continuous emissions monitoring systems (CEMS) for real-time data collection.

This collaborative approach exemplifies SDG 17 (Partnerships for the Goals), uniting government bodies, research institutions, and private industry to tackle a complex environmental challenge.

Key Findings and Contribution to Sustainable Development Goals

The year-long trial yielded significant positive results, demonstrating that environmental protection and economic progress can be mutually reinforcing.

Environmental and Health Outcomes (SDG 3 & SDG 11)

The ETS directly addressed the public health crisis caused by air pollution, a critical target of SDG 3 (Good Health and Well-being) and essential for creating SDG 11 (Sustainable Cities and Communities). In 2018, industries were responsible for 56% of Surat’s airborne particulate matter. The program achieved:

• A 20% to 30% reduction in particulate emissions among ETS plants compared to the control group.
• A 99% compliance rate with emission limits, a substantial improvement over the 30% noncompliance rate under the previous system.
• Improved ambient air quality, contributing to a reduction in the risk of cardiovascular and respiratory illnesses linked to PM2.5 exposure.

Economic and Industrial Impact (SDG 8 & SDG 9)

The market-based model proved that environmental regulation can align with SDG 8 (Decent Work and Economic Growth) and foster SDG 9 (Industry, Innovation, and Infrastructure). By turning pollution into a financial liability or asset, the ETS incentivized efficiency and innovation.

• Cost-Effective Abatement: The program allowed industries to reduce pollution in the most economically efficient manner, either by investing in abatement technology or purchasing permits.
• Incentive for Innovation: Companies that reduced emissions below their allowance could sell surplus permits for profit, encouraging investment in cleaner technologies.
• Enhanced Profitability: The overall benefits of the program were estimated to outweigh the costs by a factor of 25, demonstrating that sustainable practices can be profitable.
• Support for Economic Growth: The model provides a pathway to address environmental crises without resorting to draconian measures like factory shutdowns, thus protecting jobs and livelihoods.

Implementation Challenges and Scalability

Overcoming Implementation Hurdles

The successful rollout required addressing several challenges, providing valuable lessons for future replication.

1. Building Industry Trust: Initial skepticism from factory owners was overcome through persistent engagement and by demonstrating the financial benefits of the market.
2. Ensuring Data Integrity: When factories reported data gaps from monitoring systems, regulators implemented a rule assigning a default high pollution value, which promptly resolved connectivity issues.
3. Institutional Capacity: The GPCB’s success was aided by significant external support from 20-25 research personnel, highlighting the need for adequate staffing in regulatory bodies.

Barriers to Replication and Future Outlook

While the Surat pilot is a landmark success, scaling the model across India faces several obstacles.

• Institutional Strengthening: A robust ETS requires strong institutional frameworks, including trading platforms and enforcement systems, which may be lacking in other regions.
• Financial Investment: The high cost of continuous monitoring devices poses a significant barrier for small, informal enterprises.
• Capacity Building: Many firms are unfamiliar with compliance-based markets, necessitating focused training and a phased rollout.

Despite these challenges, the success in Surat has spurred further action. New particulate and effluent markets are planned for Ahmedabad and Surat, respectively, and a sulfur dioxide market is in development in Maharashtra. The experiment serves as a powerful proof-of-concept for developing nations, demonstrating that market-based instruments can effectively balance the critical goals of rapid economic growth (SDG 8) and public health protection (SDG 3).

Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 3: Good Health and Well-being

   • The article directly connects industrial air pollution to public health crises. It states that particulate pollution (PM2.5 and PM10) “can penetrate the lungs and enter the bloodstream, increasing the risk of cardiovascular and respiratory illnesses.” It also quantifies the impact in India, noting that long-term exposure to PM2.5 is linked to “an estimated 1.5 million premature deaths annually.” The entire effort to reduce pollution is framed as a way to mitigate a “public health crisis posed by toxic air.”

2. SDG 8: Decent Work and Economic Growth

   • The article highlights the challenge of balancing economic activity with environmental regulation. The textile factories are described as the “beating heart of the city’s economy,” and regulators hesitate to shut down non-compliant plants because “jobs and livelihoods are at stake.” The emissions trading scheme (ETS) is presented as a solution that addresses pollution “that do not compromise the equally important goal of rapid economic growth,” as it allowed factories to reduce emissions while also saving costs and increasing profits.

3. SDG 9: Industry, Innovation, and Infrastructure

   • The focus is on making industrial processes more sustainable. The article discusses pollution from “coal-burning textile processing units” and presents the ETS as an innovative approach to regulation. The scheme “encourages innovation” by allowing companies that cut emissions to sell permits for profit. It also necessitates infrastructural upgrades, such as the installation of “continuous emissions monitoring systems” in all participating plants.

4. SDG 11: Sustainable Cities and Communities

   • The issue is framed within an urban context, specifically Surat, a “textile hub” where factories are “clogging the air.” The article mentions that in 2018, industries contributed to 56% of the city’s airborne particulate matter. The goal of the ETS is to improve urban air quality, with a regulator noting that “ambient air quality in Surat has ‘definitely improved’.”

5. SDG 12: Responsible Consumption and Production

   • The article addresses unsustainable production patterns in the textile industry, which result in significant air pollution. The ETS is a mechanism designed to force industries to internalize the cost of pollution, thereby encouraging more responsible and cleaner production methods. By capping total pollution and creating a market for emissions, the scheme directly targets the by-products of industrial production.

6. SDG 17: Partnerships for the Goals

   • The project’s success is explicitly attributed to a multi-stakeholder partnership. The article details the collaboration between “a team of international researchers,” “Gujarat’s environmental regulators” (the Gujarat Pollution Control Board), and local industry represented by the “South Gujarat Textile Processors Association.” It notes that the project had “external support of about 20 to 25 people from research institutes,” which was crucial for its implementation.

What specific targets under those SDGs can be identified based on the article’s content?

1. Target 3.9: By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination.

   • The article’s core motivation is to reduce the health impacts of air pollution. It explicitly mentions that particulate matter increases the risk of “cardiovascular and respiratory illnesses” and is linked to “1.5 million premature deaths annually” in India. The ETS is a direct attempt to reduce this contamination.

2. Target 8.4: Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation.

   • The article shows how the ETS allows for economic growth to be decoupled from environmental harm. Factories reduced pollution by 20-30% while also saving on abatement costs. The article quotes a researcher saying the goal is to address the environmental emergency in a way that does “not compromise the equally important goal of rapid economic growth.”

3. Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.

   • The ETS incentivizes industries to adopt cleaner processes to reduce emissions and sell permits. The program also mandated the upgrade of infrastructure by requiring all plants to install “continuous emissions monitoring systems,” a key technology for modern environmental regulation.

4. Target 11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality.

   • The entire experiment is focused on reducing the “adverse per capita environmental impact” of Surat by tackling its primary source of air pollution. The article quantifies this impact, stating that industries contributed “56% or 77,540 tons” of the city’s particulate matter, and the project’s success is measured by the reduction of these emissions to improve urban air quality.

5. Target 17.17: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.

   • The project is a textbook example of a public-private partnership. It involved the Gujarat Pollution Control Board (public), international research institutes (civil society/academia), and the South Gujarat Textile Processors Association (private industry). The article highlights how this collaboration was essential for building trust and ensuring the successful implementation of the ETS.

Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicator 3.9.1: Mortality rate attributed to household and ambient air pollution.

   • The article implies this indicator by stating that long-term exposure to PM2.5 is “linked to an estimated 1.5 million premature deaths annually in the country.” Reducing pollution would, in turn, reduce this mortality rate.

2. Indicator 11.6.2: Annual mean levels of fine particulate matter (e.g. PM2.5 and PM10) in cities.

   • This is the primary indicator discussed. The article is centered around reducing “particulate matter pollution,” specifically “PM2.5 and PM10.” It mentions that this pollution in India “frequently exceeds the World Health Organization’s safe limit” and that the project aims to improve “ambient air quality.”

3. Volume of industrial emissions.

   • While not a formal SDG indicator, this is a direct measure used in the article to track progress for targets 9.4 and 12.4. The article provides a baseline: “77,540 tons” of particulate matter from industries in 2018. The success of the program was measured by the fact that factories in the ETS “reduced pollution emissions by 20% to 30% relative to control plants.”

4. Rate of industry compliance with environmental regulations.

   • The article uses compliance as a key metric. It notes that under the old system, “some 30% of plants were noncompliant.” In contrast, under the ETS, factories “held enough permits to cover their emissions 99% of the time,” indicating a massive improvement in compliance.

5. Existence and effectiveness of multi-stakeholder partnerships.

   • Progress towards Target 17.17 is indicated by the successful implementation of the project itself, which is described as a partnership between researchers, government regulators, and industry associations. The positive results and planned expansion of the scheme serve as evidence of the partnership’s effectiveness.

SDGs, Targets, and Indicators Analysis

Source: thinkglobalhealth.org