emission allowances

Emission allowances are permits allotted to companies that specify the amount of greenhouse gases they can emit. These allowances are part of environmental programs designed to reduce pollution by capping overall emissions. Companies that emit less can sell their surplus allowances to others that exceed their limits, creating a financial incentive to reduce pollution. This system encourages industries to lower their emissions efficiently while providing flexibility through trading. Essentially, emission allowances act as a market-based tool to help manage and decrease harmful greenhouse gases in a cost-effective manner.