CEM India 2017

CEM India - Abstract

Abstract Title: Simulating Cap-and-trade for Particulate Matter using an Agent-Based Model
Abstract Type: Oral
Presenter Name: Ms Rashmi Krishnan
Company/Organisation: J-PAL South Asia at IFMR
Session Choice: Indian Regulations

Abstract Information :

This research employs an Agent-Based Model to simulate a cap-and-trade system among roughly 120 small-scale, solid fuel-burning industries across six industrial clusters in Surat, Gujarat. We evaluate the effectiveness of trading permits for Particulate Matter (PM) emissions using techno-economic data collected from our sample of industries to construct Marginal Abatement Cost (MAC) curves for each cluster. Industrial data include revenue details, fuel use, and utilization of Air Pollution Control Devices (APCDs). All industries in our sample have successfully installed Continuous Emissions Monitoring Systems (CEMS) for PM measurement as per CPCB guidelines (Central Pollution Control Board, 2013). To evaluate effectiveness of the market, we compare costs and levels of abatement with those associated with the status quo (uniform legal standard of 150mg/Nm3). The model is constructed using NetLogo v6.0.1 (Wilensky, 1999).

Pollution regulation in India is in desperate need of renovation. As of today, environmental regulators rely on the conventional command-and-control approach to control pollution. Very simplistically, this requires enforcing an absolute technology-based or performance-based standard with severe penalties upon non-compliance. This environmental regime is not only costly for regulators and the regulated; it is also grossly inefficient, lacks transparency and operates with little or no reliable information (Duflo, Greenstone, Pande, & Ryan, 2013; Stavins, 2003).

In theory, the reason that emissions markets are able to reduce pollution at lower cost than non-market methods is because, under an emissions market, the plants with the lowest marginal costs of abatement undertake the most abatement, and those with higher costs do not cut pollution as much or at all. We expect to see lower mean PM emissions across each cluster as well as savings in abatement costs in comparison with the status quo (Fowlie, Holland, & Mansur, 2009). However, we expect cost savings to reduce with more stringent caps. This research is an extension of an ongoing project with the Ministry of Environment, Forests & Climate Change and the Central Pollution Control Board.