Emissions trading

Emissions trading is a market-based approach to controlling pollution by providing economic incentives to reduce pollutant emissions. It is a system in which a cap is placed on the total amount of certain pollutants that may be emitted. Under this cap, companies or other organizations are issued emission permits that they can trade or sell among themselves as needed. The total number of permits cannot exceed the cap, and the limit is lowered over time to reduce total emissions. The emissions trading system provides an economic incentive for companies to reduce their emissions in order to sell the permits or purchase them from other companies that have reduced their emissions, making it an efficient tool for climate protection.

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