Breathing bad: Industrial expansion needn’t leave India’s air even more toxic

India has emerged as a leading voice for low- and middle-income countries on climate action, setting itself an ambitious target of achieving net zero emissions by 2070. Bridging the gap between economic growth and emission reduction requires bold innovations. One such innovation is an emissions trading scheme (ETS) for particulate matter (PM) pollution, piloted in Gujarat, a state at the forefront of industrialization.

Second, emission markets can be tailored to the needs of low- and middle-income countries. The flexibility offered is particularly relevant for micro, small and medium-sized enterprises to stay productive and adapt over time. It enables business units of all sizes to meet regulatory targets.

The Surat market was found to function almost perfectly; industrial plants held enough permits to cover their emissions 99% of the time. By contrast, plants outside this market were in violation of their pollution limits at least a third of the time.

This approach can be replicated in different geographies and used for different pollutants. Building on the success of the pilot, the GPCB expanded the programme to cover additional Surat clusters and launched an ETS in Ahmedabad in September 2023.

Gujarat is now considering assessing the feasibility of an ETS for other pollutants like sulphur emissions. Maharashtra is all set to announce a sulphur emissions market in five industrial sectors, with similar efforts underway in Rajasthan and other states.

Third, the Gujarat ETS for particulate matter shows how digital infrastructure and big data can enable innovative environmental regulation. It relies on real-time emission data from Continuous Emissions Monitoring Systems (CEMS) installed in industrial chimneys, allowing informed decision-making by regulators and companies.

Low-quality data is penalized by the system, which serves to improve pollution monitoring accuracy and credibility—critical for effective environmental regulation through an ETS.

Toxic air represents more than an environmental concern—it’s a health and economic crisis. Exposure to fine particulate matter pollution has been linked to severe respiratory illnesses and premature deaths. According to the Air Quality Life Index, India’s population could gain 3.5 years in life expectancy on average if the country’s air quality meets World Health Organization guidelines.

Cleaner air is also a prerequisite for sustained economic growth. A high proportion of deaths in India are attributable to toxic air. The World Bank estimates that the lost output from such premature deaths equals 1.36% of India’s annual GDP.

India’s National Clean Air Programme and the expansion of real-time air quality monitoring mark a welcome policy shift: clean air has become fundamental to India’s economic and human development agenda. Gujarat’s ETS experiment offers a powerful example of how scientific evidence and innovative regulation can combine to help us meet our economic growth and environmental sustainability imperatives.

These priorities need not be mutually exclusive. Well-designed emissions trading markets can help India deliver on both objectives and the payoffs could be substantial.

Gargi Pal of J-PAL South Asia contributed to this piece.

The authors are, respectively, environmental engineer and Nodal Officer, ETS (PM), Gujarat Pollution Control Board; and lead, air and water labs, J-PAL South Asia.