carbon emissions trading

Carbon emissions trading is a market-based system that helps reduce greenhouse gases. Companies are given a cap on how much CO₂ they can emit. If they emit less, they can sell their extra allowances to others who emit more. This creates a financial incentive for companies to cut emissions, as reducing pollution can generate profit. The overall cap ensures that total emissions stay within target levels. By trading allowances, the system promotes cost-effective emission reductions and encourages industries to innovate toward cleaner practices.