International Lessons For Designing India's Emissions Trading Scheme

Combating climate change has become one of the most pressing challenges of our time. As global temperatures rise and the impacts of climate change intensify, countries around the world are seeking strategies to reduce greenhouse gas emissions. One of the most powerful tools in this endeavour is the emissions trading scheme (ETS).

An ETS provides a market-driven approach to climate change. Governments set a cap on emissions for particular sectors and issue emission permits to companies in those sectors. These permits can be freely traded between companies, effectively setting a price on emissions and incentivising companies to lower their emissions. By reducing the cap over time an ETS plays a critical role in aligning national efforts with global climate goals, making it a cornerstone of modern climate policy.