Project Description

Emissions trading, also known as cap and trade, is a market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants. Under this system, a central authority sets a limit, or cap, on the amount of a pollutant that can be emitted. Companies are then allocated or can purchase permits that allow them to emit a certain amount of the pollutant. If a company emits less than its allocated amount, it can sell the excess permits to other companies. Conversely, if a company exceeds its allocated amount, it must purchase additional permits or face penalties. The goal of emissions trading is to create a financial incentive for companies to reduce their emissions, thereby mitigating the impacts of climate change.