Three industrialised states Gujarat, Maharashtra and Tamil Nadu are about to launch the world's first market for trading permits in emissions of particulate matter.
A major stumbling block arose at the outset, when some participating governments allocated too many trading permits to polluters when the market was created.
Phase I led to the oversupply of trading permits and resulted in Europe's heavy industry emitting less carbon than their quota of free permits, allowing them to sell on the allocation they have not used to over-polluters.
Canada's environment minister Peter Kent defended the decision on Monday, saying it would save the country $14bn in emissions trading permits it could have had to buy for not achieving its Kyoto targets.
The European Union already has a system of trading permits for industrial emissions of heat-trapping gases in which polluters can meet limits either by reducing emissions or buying credits from more efficient producers.
On the other side is France, which uses nuclear sources to generate most of its power, and Britain, which favors climate regulation, partly because it has become a hub for trading permits to emit carbon dioxide.
Fine for American asthma sufferers, if it eventually happens, but these are not greenhouse gases.America would like a worldwide arrangement for trading permits to emit carbon dioxide, modelled on its own successful system in which companies trade the right to belch sulphur.
In this study, we present evidence of infrequent trading in the CCX, consistent with emerging markets that are inhabited by non-competitive agents trading permits.
