Slide 12
Instead of using strict rules that tell every factory exactly what to do, Gujarat
introduced an project called an Emissions Trading Scheme, or ETS, which
is also known as a cap-and-trade system.
The first step is setting a pollution cap. Basically the government decides
the maximum amount of pollution that each factory in an area are allowed to
produce. This step helps to organize the total amount of pollution
Once that cap is set, each factory receives emission permits. Each
permit allows them to emit a certain amount of pollution. Permits are given
for free or sold to businesses through auction
To make sure this system works, there is checking part. The government
will monitor real emissions and measure by CEMs (Continuous Emissions
Monitoring System) and will report in real time
Trade permit, let me explain more clearly about this. Looking at the graph,
if a factory produces less pollution than its limit, they can sell the permit to
another factory that needs more, and they can gain profit from selling it, just
like a normal market
So, if the industries don’t want to waste money on buying permits, they need
to be careful about their limit emissions and permits to not get a penalty
from the government. Or they can invest in cleaner technology to
maximize their profit, and overtime when government lowers the limit this
becomes a smart business decision.
Slide 13
“Using business model perspective for easier to understand, Gujarat’s ETS
works by setting pollution limits and allows firms to trade emission permits,
with the government acting as the regulator and industries as the
key participants.
The primary benefit of this scheme is cleaner air and improved public
health in society. For industries, it means lower compliance costs and
incentives to reduce pollution. The scheme isn't designed to make a
profit, but it does create economic value by motivating companies to reduce
emissions effectively. It also rewards for those that perform well in their
efforts. This way, we support a healthier environment and encourage
responsible business practices
Slide 14
Gujarat's ETF has significantly reduced particulate pollution, leading to
better public health, which is a good sign of success solution
On top of that, business compliance has skyrocketed, dropping non-
compliance from one-third of firms to under 1%. These improvements
are boosting public trust in environmental regulations while promoting
sustainable development as well as balancing health protection with
economic growth.
Slide 15
Gujarat’s ETF has led to a marked improvement in air quality by
implementing strict emission caps. In just two years, particulate emissions
fell by 20 to 30%, surpassing the effectiveness of traditional pollution
control methods. This reduction not only eases pressure on ecosystems but
also inspires businesses to adopt cleaner technologies, paving the way for
long-term sustainability.
Slide 16
Throughout the government regulation, businesses have 2-way
compliance options by either purchasing emission permits or
investing in cleaner technologies. As I said before, firms that successfully
reduce emissions can sell surplus permits, creating a financial incentive for
innovation rather than imposing penalties.
The Surat pilot program illustrates this effectiveness, showing an 11%
reduction in compliance costs while profits still increased,
demonstrating that the emissions trading system is both environmentally
and financially sustainable.