Tradable Permits for Environmental Protection: Case Study of an
Integrated Steel Plant in India
Rita Pandey, Fellow
National Institute of Public Finance & Policy
New Delhi
and
Geetesh Bhardwaj, Project Associate
National Institute of Public Finance & Policy
New Delhi
Abstract: Cost effective policies allow minimising the compliance costs associated to
reaching a desired environmental quality target. In this paper a conceptual model has
been developed to examine the compliance costs under an intra-plant emission trading
system for a non-uniformly mixed assimilative pollutant. The model incorporates the
number of emission sources, the concentration of pollutants emitted at each source, the
marginal cost of abatement for each source, the transfer coefficient that relates emission
at each source with the impact on ambient air quality, and the desired ambient air
quality target. The model is applied to an integrated steel plant in India. Results of this
study demonstrate that the emission trading is more cost effective than the existing
regulatory system. Further, intra-plant trades would result in significant savings to the
steel plant while securing an improvement in ambient air quality in the studied
geographical area.
Address for Correspondence:
Dr. Rita Pandey
Fellow
National Institute of Public Finance & Policy
18/2, Satsang Vihar Marg
Special Institutional Area
New Delhi 110 067
INDIA
Fax: 91-11-6852548
Email: [email protected]