emissions trading schemes

Emissions trading schemes are market-based programs that limit the total amount of greenhouse gases companies can emit. The government sets a cap and divides it into allowances, which companies can buy or sell. If a company emits less than its allowance, it can sell the extra credits; if it needs to emit more, it must buy credits. This creates a financial incentive to reduce emissions, encouraging companies to innovate and become more efficient while overall emissions stay within the cap. It's a flexible, cost-effective way to meet environmental goals through economic incentives.