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Making Pollution Control More Effective, Less Expensive
The foundation for effective and efficient pollution control in India rests on four legs: high-quality monitoring, consistent enforcement, policies compatible with the incentives of polluters and other stakeholders, and accountability through public disclosure
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Environmental regulation in India is overdue for an overhaul. State Pollution Control Boards are desperately understaffed. The environment acts have not kept pace with changing circumstances, and continue to rely on stringent command-and-control norms. The foundation for effective and efficient pollution control in India rests on four legs: high-quality monitoring, consistent enforcement, policies compatible with the incentives of polluters and other stakeholders, and accountability through public disclosure.
One major challenge for regulators has been to know who is polluting how much. Till very recently, this had to be done through manual audits, which have some systemic problems. One, plants can be on their best behavior during these audits, making the reported emissions unrepresentative of their regular operations. If the inspections are conducted by third party auditors, these auditors have clear incentives to underreport their clients’ emissions. Indeed, previous research found that 29% of the audits studied falsely reported compliance.
Technology can help, but only to a point. Continuous Emissions Monitoring Systems represent a paradigm change in this direction: these devices are installed in industrial stacks (chimneys) and can measure and relay readings to the regulator in real-time. This gives the regulator (and the plants themselves) unprecedented visibility into air emissions and effluent discharges. This is not fool proof though, and there remain multiple points of vulnerability in ensuring that the data sent to the regulators are accurate.
Strict rules, if unenforceable, are ultimately ineffective. Non-compliance to regulatory norms set for industrial units is a criminal offence under the Air Act. Dragging plants routinely to the courts and getting their owners imprisoned is fundamentally unfeasible. In the absence of laws that enable the regulators to take proportionate action, they are forced to find intermediate measures in an ad hoc manner: mandate new pollution control equipment, or in extreme cases, cut access to power and water for days till the issue is redressed. These measures cost industries a lot of money, and may eventually be ineffective in reducing pollution. Installation of new equipment, for example, does not guarantee their usage or regular maintenance.
Most industrialized countries, including China, rely on monetary fines to reduce industrial pollution. Monetary fines have several advantages. One, they can be designed to be proportional to the extent of the offence. Two, these fines can be levied automatically by the regulators, making their action predictable and transparent. Three, for the industries, monetary fines essentially become a cost of doing business that they can factor into their decision-making. The design of the fines should ensure that these strike the balance between discouraging noncompliance, and not being prohibitively high and hence, unenforceable.
An emissions trading regime is likely to be more efficient still. Allowing industrial plants to trade permits could allow achieving reductions in pollution as a group at much lower costs. Reducing one tonne of emissions may be much less expensive for some plants compared to others. Allowing industries to trade encourages industrial plants for whom it is most economical to reduce emissions to take these actions, and then sell their permits to those for whom it's more economical to buy these permits instead of taking action themselves. The CPCB has been engaged in designing a pilot emissions trading scheme in three states: preliminary estimate suggests that, when implemented, trading permits could reduce costs of compliance for industries by nearly 70%, while cutting emissions by half. Experience from around the world suggest that well-designed economic instruments may be more compatible with the incentives of industrial plants to reduce their emissions and at lower costs.
We have a long way to go but there are reasons to be optimistic. Recently, the Maharashtra Pollution Control Board has introduced a star-rating scheme to publicly disclose pollution compliance of individual plants. Central Pollution Control Board (CPCB) has mandated that all high pollution industrial plants install continuous emission monitoring. There are reports of an amendment to the environment protection act being tabled to allow civil penalties, although some of the features of the amendment may seem like watering down the rules. Together, these represent much-needed reforms to regulation in the country: their actual effectiveness depends on the design, and willingness among industries, regulators and the public to engage with their implementation.
Santosh Harish is Associate Director – Research of the India center of the Energy Policy Institute at the University of Chicago (EPIC- India). His research interests lie in energy and environment policy, with ongoing work in electricity distribution reforms and air pollution monitoring in India.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.