Gujarat Set To Roll Out ETS Statewide After Surat, Ahmedabad Success

The pilot project of ETS was launched in 2019 in Surat. Backed by the Gujarat Pollution Control Board (GPCB), along with the University of Chicago, Yale University, and the Abdul Latif Jameel Poverty Action Lab (J-PAL), the scheme brought together 355 industries under one emissions cap. The results were promising: PM levels dropped by 30 percent in just two years, industries became 11 percent more cost-efficient, and compliance rates hit nearly 100 percent. Key to this transparency was the use of Continuous Emission Monitoring Systems (CEMS), which provided real-time data on emissions.

Riding on this success, the government extended ETS to Ahmedabad in 2023, bringing clusters like Vatva, Naroda, and Danilimda into the fold. This time, 118 industries joined live trading. Under the scheme, 80 percent of emission allowances are allocated for free, while remaining 20 percent are auctioned off every week. Prices per kilogram of PM range between ₹5 and ₹100. CEMS control facilities have been made available for proper monitoring.

State Forest and Environment Minister Mulu Bera said, “ETS reduces industry costs, simplifies government regulation, and gives citizens cleaner air. The results in Gujarat have laid the groundwork for a national carbon credit trading framework. Other states are studying Gujarat’s model. As four major cities in the state struggle with poor air quality, the GPCB has launched a ₹3,000 crore air pollution control initiative.”

GPCB Chairman R.B. Barad sees ETS as a transformative step. “It drives industries toward zero emissions using a cap-and-trade model for Particulate Matter. Surat and Ahmedabad stand as key examples. Now, the government plans to implement ETS in other industrial zones including Vadodara, Rajkot, Vapi, Ankleshwar, Bharuch, and Morbi. The target is to improve the Air Quality Index by 35-50 percent by March 2026. Efforts will also extend to tackling plastic waste and e-waste with tougher enforecement.”

Michael Greenstone, a global expert on ETS from the University of Chicago, said, "The market not only reduced pollution and industry costs, but also enabled the government to enforce environmental laws more effectively — a rare win." 

Sanjeev Kumar, Principal Secretary of the Forest and Environment department, is leading the charge to scale up the programme. He emphasised that both the department and GPCB are fully committed to protecting public health by reducing pollution—a goal the ETS experiment has proven achievable.

A senior GPCB official clarified that ETS is not about punishing industries—it is about creating incentives. “It encourages industries to act for cleaner air, with the market assigning value to those efforts.” Other states and even the central government are now paying attention to this model and working towards a national carbon trading platform based on ETS.

What is ETS And Why Does It Matter?

ETS is a market-based system that sets a cap on how much pollution industries can release. If a unit emits less than its allocated limit, it can sell the unused credits to another industry. In Surat, textile industries have been following PM emission rules under the ETS for six years now. The Gujarat government has also partnered with NITI Aayog to replicate the ETS model in other states. By design, ETS aims to lower levels of dangerous fine particulate matter—PM2.5 and PM10—which are links to respiratory and heart diseases. Industries part of the programme must install scientifically calibrated monitoring equipment on their chimneys or emission outlets.

How Does The Trading System Work?

Industries that emit less than their quota can trade their extra credits on an ETS portal, while those exceeding the cap can buy additional credits to avoid penalties. A separate e-portal has been set up for ETS trading, and registration is mandatory for participation.

Challenges Faced By Industries On Ground:

➢ ETS requires CEMS, which can be expensive and difficult to maintain for small and medium enterprises. Technical failures are also common.
➢ Industries are required to upload daily CEMS data to the portal. Failure due to any technical glitch may result in penalties.
➢ Many industrialists lack proper understanding of market dynamics and credit trading systems, limiting their ability to benefit and plan effectively.
➢ ETS rules are still evolving. Many industries find it difficult to secure permits due to lack of clarity in regulations.