Emissions Trading System

An Emissions Trading System (ETS) is a market-based approach to reducing greenhouse gas emissions. Governments set a cap on emissions and issue a limited number of permits, each allowing a certain amount of CO2 to be emitted. Companies that reduce their emissions can sell their excess permits to others that need them, creating a financial incentive for pollution reduction. This system encourages innovation and cost-effective solutions to meet environmental targets while allowing businesses some flexibility in how they reduce their emissions. Ultimately, it aims to lower overall emissions while supporting economic growth.