Breathing New Life into India's Cities
Markets Show the Way
-Paras Jasrai and Akshay Fadnis
Introduction
According to a comprehensive study published in The Lancet Planetary Health, air pollution in India is not just an environmental issue but a dire public health emergency. As per the study, nearly 1 out of 5 deaths in India are caused by air pollution. The report further highlights that India faces one of the highest rates of premature mortality due to air pollution globally. This crisis is exacerbated by the high levels of particulate matter, especially PM2.5 (it is the size of the air pollutant up to 2.5 microns in diameter), which penetrates deep into the lungs, causing a plethora of health issues ranging from respiratory infections to cardiovascular diseases.
The Lancet report underscores the urgent need for robust policy interventions by the national government. While India's National Clean Air Programme (NCAP) is a step in the right direction, it falls short in several aspects when compared to the more comprehensive air quality policies of nations like China, Mexico, and the United States. These countries have demonstrated success through targeted sector-specific strategies, robust financial planning, and strong enforcement mechanisms. To bridge these gaps and further enhance air quality, India could benefit from scaling up its homegrown solution of Clean Air Markets, particularly in the top 20 cities that are plagued by high particulate pollution.
Shortcomings of India's NCAP
India's NCAP, while an ambitious initiative, falls short in several areas compared to global standards. Unlike China's focused industrial and residential emissions approach, NCAP lacks sector-specific strategies. The US, Europe and Japan have shown the effectiveness of stringent regulatory frameworks and compliance mechanisms for abatement of air pollution, areas where NCAP could be strengthened. As far as the financial allocation and fund utilization are concerned, the track record of the program has been quite lacklustre. A study done by the Centre for Research on Energy and Clean Air (CREA, 2024) shows that 82 non-attainment cities utilized only 40% of the allocated INR1,253 crores, while 49 cities (with million-plus population) used only 61% out of the allocated INR9,610 crores from April 2019-November 2023. Furthermore, the study indicates that in 131 cities where NCAP was implemented, a meagre 6.2% of the allocated funds was towards capacity building and a paltry 0.7% towards public outreach. This indicates a lack of priority towards skill enhancement (which is imperative in identifying the causes of air pollution in a particular city), weak enforcement mechanisms and most importantly having the public as a stakeholder in curbing air pollution. In addition, there has been very slow progress on building air information centres, pollution forecasting & monitoring systems.
Note: Figures in the pie chart are in percentages.
Source: CREA, 2024
Learning from Global Practices
A crucial aspect common in countries that witnessed substantial progress in curbing air pollution was public outrage towards worsening air quality that fueled the government’s priority towards air pollution and even accelerated the policy framing and implementation process. While China's air pollution control policies, particularly the Air Pollution Prevention and Control Action Plan, have significantly reduced emissions through targeted measures in power plants and industries, Mexico's struggles with enforcement highlight the need for robust compliance mechanisms. On the other hand, the US with its Clean Air Act demonstrates the power of a strong regulatory framework coupled with market-based approaches like cap-and-trade programs (explained below).
Targeting Top 20 Cities
Since the current focus of the NCAP is broad-based, we think a targeted approach by focusing on the top 20 cities with the highest particulate pollution could help in reducing the overall air pollution and also act as a model for implementation in other cities. The implementation would involve several key steps:
Sector-specific strategies: Tailoring strategies to target predominant pollution sources in each city, such as vehicular emissions in Delhi or industrial emissions in Surat.
Public-private partnerships: Encouraging collaboration between the government and private sector for technology sharing and funding.
Market-based mechanisms: Introducing cap-and-trade systems for major pollutants, allowing industries to trade emission credits, thus promoting cost-effective pollution reduction.
Technology and infrastructure development: Promoting the adoption of cleaner technologies and developing infrastructure for monitoring and enforcement.
Regulatory framework and compliance: Establishing stringent pollution control norms and ensuring compliance through regular inspections and penalties for non-compliance.
Public awareness and participation: Conducting awareness campaigns and involving local communities in air quality monitoring and pollution reduction initiatives.
Continuous monitoring and policy adjustment: Regularly assessing air quality and adjusting policies based on effectiveness and feedback.
Implementing Clean Air Markets in India
Taking a cue from the US, India plans to gradually unleash the power of markets via its Clean Air Markets Program which was piloted in Surat in 2019. The world’s first market for particulate pollution works as follows:
There is a capping on “the overall amount of pollution allowed from all regulated industries. Individual plants are allotted an initial quota of permits, allowing them to emit a restricted amount of pollution. Unlike the existing practice, however, plants are free to buy and sell these permits amongst themselves. Plants for whom it is inexpensive to cut pollution have an incentive to make large reductions—they can make money by selling permits to other factories for whom it might be very expensive to reduce emissions. Plants that buy permits can do so for less than it would have cost to install pollution abatement equipment or make other investments that would have been required under previous regulations. For both the permit sellers and purchasers, operating costs go down while environmental goals are met.”
Benefits and Impact
Industries part of this Clean Air Market program in Surat have been able to reduce their pollution levels by 24% compared to those who were excluded. Most of the pollutant cities featured in the top 20 list in 2023 were industrial cities and thus, the expansion of the Clean Air Markets program to these top 20 cities could lead to significant improvements in air quality. This approach would not only reduce particulate matter but also other pollutants, contributing to better public health and environmental quality. It is also suitable for such states as there is not much state capacity needed for implementation. The economic incentives provided by the cap-and-trade system would encourage industries to innovate and invest in cleaner technologies, fostering sustainable industrial growth, maintaining profit levels, and helping the states garner more revenues.
Conclusion
Adopting Clean Air Markets in India, drawing lessons from global best practices, offers a promising path to tackling the challenges of air pollution. By focusing on targeted, region-specific strategies and leveraging market-based mechanisms, India can make substantial strides in improving air quality, particularly in its most polluted cities. This approach aligns with its broader goals of sustainable development and public health improvement, marking a significant step forward in its environmental policy and vitally would be supportive of the required economic growth for becoming Viksit Bharat by 2047.
References:
EPIC. (n.d.). China National Air Quality Action Plan (2014). Retrieved from EPIC
Centre for Research on Energy and Clean Air. (2024). Tracing the Hazy Air: 2024 Progress Report on National Clean Air Programme (NCAP). Retrieved from Energy and Clean Air
EPIC. (n.d.). Using Markets to Confront Pollution and Climate Change in India. Retrieved from EPIC
Clean Air Markets in India. (n.d.). ETS in India. Retrieved from Clean Air Markets
EPIC. (n.d.). United States Clean Air Act. Retrieved from EPIC
Clean Air Markets in India. (2021). ETS India Research Summary. Retrieved from Clean Air Markets
The Lancet Planetary Health. (2020). Health and economic impact of air pollution in the states of India: the Global Burden of Disease Study 2019. Retrieved from The Lancet
IndiaSpend. (n.d.). Surat Emission Trading Scheme: How Gujarat Works to Reduce Air Pollution. Retrieved from IndiaSpend