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<p>The study examines the effectiveness of the Performance, Achieve, and Trade (PAT) scheme in emission control for the Indian manufacturing sector, and links it with the net-zero (NZ) goal. The study contributes uniquely in two ways: (1) Linking sectoral policy with the national and international commitments; (2) Distinguishing the contribution of the policy and other schemes. In this context, we address the following questions: (1) Does PAT help reduce emissions? (2) How do we segregate the effect of PAT from other schemes? (3) Does a hypothetical price reform ensure NZ? Using the data from the Centre for Monitoring Indian Economy (CMIE) Prowess IQ, we conduct our analysis. Using the Generalized Synthetic Control (GSC) method, we examine the effectiveness of the PAT. To assess its standalone contribution, we employ semi-elasticity estimation, and the long-run effect is examined using the Dynamic Panel Model. As a measure of robustness, we use Propensity Score Matching, Quantile Treatment on Treated (QTT) to control heterogeneity, and Generalized Method of Moments (GMM) to control the endogeneity. The major findings suggest: (1) Industries under the PAT schemes emit 25% less compared to their counterfactuals; (2) Existing high energy prices are partly responsible for emission reduction; (3) The price elasticity is -0.87 in the short-run, but it rebounds in the long-run; (4) The robustness checks produce similar results to the baseline findings; (5) A hypothetical price reform helps reduce emissions immediately by 50%; 5. A new levy should be a price differential, irrespective of the level of emission.</p>

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Can the performance, achieve, and trade scheme help Indian manufacturing achieve its net-zero goal?

  • 期刊论文

  • 发表日期：

    2026年3月31日

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  • Prantik Bagchi,
  • Santosh Kumar Sahu

摘要

The study examines the effectiveness of the Performance, Achieve, and Trade (PAT) scheme in emission control for the Indian manufacturing sector, and links it with the net-zero (NZ) goal. The study contributes uniquely in two ways: (1) Linking sectoral policy with the national and international commitments; (2) Distinguishing the contribution of the policy and other schemes. In this context, we address the following questions: (1) Does PAT help reduce emissions? (2) How do we segregate the effect of PAT from other schemes? (3) Does a hypothetical price reform ensure NZ? Using the data from the Centre for Monitoring Indian Economy (CMIE) Prowess IQ, we conduct our analysis. Using the Generalized Synthetic Control (GSC) method, we examine the effectiveness of the PAT. To assess its standalone contribution, we employ semi-elasticity estimation, and the long-run effect is examined using the Dynamic Panel Model. As a measure of robustness, we use Propensity Score Matching, Quantile Treatment on Treated (QTT) to control heterogeneity, and Generalized Method of Moments (GMM) to control the endogeneity. The major findings suggest: (1) Industries under the PAT schemes emit 25% less compared to their counterfactuals; (2) Existing high energy prices are partly responsible for emission reduction; (3) The price elasticity is -0.87 in the short-run, but it rebounds in the long-run; (4) The robustness checks produce similar results to the baseline findings; (5) A hypothetical price reform helps reduce emissions immediately by 50%; 5. A new levy should be a price differential, irrespective of the level of emission.