cap-and-trade systems

Cap-and-trade systems are market-based mechanisms that regulate emissions by setting a limit (or cap) on the total amount of pollutants that can be released within a specified period. This cap is divided into permits or allowances that can be traded among companies, allowing those with lower emissions to sell their excess permits to those exceeding their limit. The system provides an economic incentive for companies to reduce their emissions by requiring them to either reduce their pollution or purchase additional permits.

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