The Surat Emissions Trading System model is a starting point for markets to be useful in achieving both economic and environmental goals.

EPIC Director Michael Greenstone explains how the market model allows industry to find the cheapest ways to reduce pollution. That is, it creates a market in emissions where people effectively have to pay to pollute. Greenstone explains that this style of pollution market has been used in other places around the world, and has been successful.

Upadhyay asks Greenstone if this model can be effectively implemented in other industries.

Greenstone explains that the Surat model was an experiment. 150 industries in Gujarat were placed into the new pollution market at random, and another 150 continued to be regulated by the Gujarat Pollution Control Board. Over the next few years, the plants, primarily textile, in the emissions market reduced pollution by 20-30 percent — an enormous reduction in pollution achieved through their own innovation and creativity to reducing emissions, Greenstone says. Additionally, these plans reduced the cost of compliance with environmental law, which went down about 15 percent.

Greenstone explains that this model exemplifies a sharp counterpoint to the idea that environmental goals have to be in conflict with economic goals. The plants were able to both make more money and the people of Surat breathed cleaner air.

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Areas of Focus: Energy Markets
Energy Markets
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