Surat’s pollution market: A pioneering initiative to cut air pollution and fight climate change

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Surat, a city in India, has become the first in the world to launch a pollution market to tackle its air pollution problem. The market allows industries to trade permits for emitting particulate matter (PM), a harmful pollutant that affects human health and the climate.

The market works by setting a cap on the total amount of PM that can be emitted by all industries in Surat. Each industry is allocated a certain number of permits based on its historical emissions. If an industry wants to emit more than its permits allow, it has to buy extra permits from other industries that have reduced their emissions below their permits. This creates an incentive for industries to invest in cleaner technologies and reduce their emissions, while also generating revenue for the city.

The market is expected to reduce Surat’s PM emissions by 20% in the first year and by 50% in the next five years. This will improve the air quality and health of the city’s residents, as well as contribute to India’s climate goals. The market is also seen as a model for other cities in India and around the world to adopt similar schemes to tackle air pollution.

The market was launched on November 15, 2023, at the COP28 climate summit in Glasgow, Scotland. It is supported by the World Bank, the International Finance Corporation, the Energy Policy Institute at the University of Chicago, and the Gujarat Pollution Control Board. The market is part of Surat’s broader strategy to become a carbon-neutral city by 2050.

Surat is one of the fastest-growing cities in India, with a population of over 6 million people. It is also one of the most polluted cities in the country, with PM levels often exceeding the national standards. PM is a mixture of solid and liquid particles that can penetrate deep into the lungs and cause respiratory and cardiovascular diseases, as well as premature death. PM also contributes to global warming by absorbing and scattering sunlight.

The pollution market is a market-based approach to regulate emissions, as opposed to command-and-control regulations that impose uniform standards or taxes on polluters (Pigouvian tax). The market allows flexibility and efficiency for industries to choose the best way to reduce their emissions, while also creating a price signal that reflects the social cost of pollution. The market also encourages innovation and competition among industries to find the most cost-effective solutions to cut emissions.

The pollution market is not a new concept, as it has been successfully implemented in other countries and regions, such as the US, the EU, and China, to reduce emissions of other pollutants, such as sulfur dioxide and nitrogen oxides. However, Surat is the first city to apply the market to PM emissions, which are more difficult to measure and monitor. Surat has overcome this challenge by using advanced sensors and satellite data to track PM emissions from each industry in real-time.

The pollution market is a bold and innovative initiative that shows Surat’s commitment to fight air pollution and climate change. It is also a testament to the city’s vision and leadership in finding solutions that benefit both the environment and the economy. Surat hopes that its pollution market will inspire other cities to follow its example and join the global effort to create a cleaner and healthier future for all.

The pollution market in Surat can also have a positive impact on the net zero target of the Indian government, which aims to achieve a net-zero emission target by 2070. The pollution market can help India achieve its short-term and long-term targets under the Panchamrit action plan, which includes reaching a non-fossil fuel energy capacity of 500 GW by 2030, fulfilling at least half of its energy requirements via renewable energy by 2030, reducing CO2 emissions by 1 billion tons by 2030, reducing carbon intensity below 45% by 2030, and achieving a net-zero emission target by 2070.

The pollution market can also support India’s transition to a low-carbon economy by creating a price signal that reflects the social cost of pollution, encouraging innovation and competition among industries to find the most cost-effective solutions to cut emissions, and generating revenue for the city that can be used for green investments and social welfare.

The pollution market can also serve as a model for other cities in India and around the world to adopt similar schemes to tackle air pollution, which is a major contributor to climate change and a threat to human health. By reducing PM emissions, the pollution market can improve the air quality and health of the city’s residents, as well as contribute to India’s climate goals.


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