India’s emerging “cap & trade” market for wastewater permits
Extended User Responsibility (EUR) wastewater certificates to be issued under “cap & trade” compliance trading system
The October 7, 2024 gazette draft rules by the Union Ministry of Environment, Forest, and Climate Change is being seen as a significant step in India’s efforts to overhaul its Liquid Waste Management (LWM) system.
A bulk user is broadly defined to include establishments such as buildings occupied by Central or State government departments and undertakings, local bodies, public sector entities, private companies, hospitals, nursing homes, educational institutions (schools, colleges, universities, and hostels), hotels, markets, places of worship, stadia, sports complexes, and other private or public commercial, institutional, or residential entities with an average daily water usage exceeding 5,000 litres.
The mention of ERUs is similar to the “cap and trade” compliance trading mechanism and is based on the handbook published by 2030 Water Resources Group hosted by World Bank Group which advocated wastewater reuse certificates as tradable permits as a policy intervention and structured framework at standardizing the treatment and management of liquid waste across a wide spectrum of sources.
Similar to carbon credits, entities that use treated wastewater would receive ERUs which could be monetized or traded with other developers.
Definitions: The draft introduces the several new definitions-
Liquid Waste: Refers to any liquid or associated sludge that is disposed of in a way that might impact environmental quality. These include domestic wastewater, blackwater, greywater and industrial effluents.
Extended User Responsibility (EUR): It is a requirement for bulk consumers and industries to manage the environmental impact of their liquid waste through treatment, reuse or safe disposal including obtaining certificates from registered treatment facilities if unable to meet on-site treatment needs
The new rules propose reuse targets for bulk water consumers: 20 per cent reuse by 2027–28 for industries and housing societies, increasing to 50 per cent by 2030–31.
However, these new rules have inconsistent targets across various national missions and frameworks which have already decided timelines for water reuse, such as —
- Swachh Bharat Mission 2.0 (SBM 2.0) mandates that cities with populations under 100,000 must reuse at least 20 per cent of their treated wastewater as much as feasible.
- Atal Mission for Rejuvenation and Urban Transformation (AMRUT 2.0) aims for cities to recycle 20 per cent of their total water demand and 40 per cent of industrial water demand through treated wastewater.
- National Mission for Clean Ganga (NMCG) framework sets even higher targets for states where Sewage Treatment Plants (STPs) are operational — requiring 50 per cent reuse by 2025 and 100 per cent by 2050. Where STPs are not yet operational, the targets are 30 per cent by 2030, rising to 50 per cent by 2035 and 100 per cent by 2050.
One of the critical aspects of this notification is its call for both centralised and decentralised treatment solutions.
By advocating for decentralised systems, the notification acknowledges the limitations of large, centralised treatment plants, which often struggle to cope with the growing volumes of wastewater. Decentralised systems, however, present their own challenges, particularly in terms of funding and expertise.
The success of these rules and trading markets will heavily depend on financial support from both the government and private entities.
The draft rule did not provide a detailed roadmap for how local governments and smaller urban bodies will finance these new infrastructure requirements, which may hinder the effectiveness of the decentralised approach (source).
