Greenhouse Gas Emissions Trading

Greenhouse Gas Emissions Trading, often called cap-and-trade, is a market-based approach to control pollution. Governments set a limit (cap) on total greenhouse gas emissions for specific industries. Companies receive or buy allowances that permit them to emit a certain amount of gases. If they emit less than their allowance, they can sell the excess to others. This creates a financial incentive for companies to reduce emissions since they can profit from selling unused allowances, ultimately helping to lower overall pollution levels in a cost-effective way.