ETS (Emissions Trading System)

An Emissions Trading System (ETS) is a market-based approach to reduce pollution, especially greenhouse gases. Governments set a cap on total emissions allowed from certain industries and distribute or sell permits that allow a company to emit a specific amount. Companies can trade these permits, so those that cut emissions below their quota can sell extra permits to others. This creates an economic incentive to reduce pollution efficiently, as lowering emissions can generate revenue. Overall, ETS encourages emission cuts by making pollution a tradable commodity within a regulated limit.