Emissions trading
Emissions Trading
Emissions trading, also known as cap and trade, is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants.
Pronunciation
Emissions Trading: /ɪˈmɪʃənz ˈtreɪdɪŋ/
Etymology
The term "emissions trading" is derived from the process it describes. "Emissions" refers to the release of pollutants into the atmosphere, and "trading" refers to the buying and selling of allowances to emit these pollutants.
Definition
Emissions trading schemes (ETS) are a type of policy instrument used to reduce greenhouse gas emissions. Under an ETS, an upper limit on emissions is set and allowances, in the form of permits to emit CO2, are given to companies. Companies that reduce their emissions can sell their surplus allowances to companies that are not able to make reductions as easily, creating a financial incentive for businesses to reduce their emissions.
Related Terms
- Carbon Pricing: An approach that sets a price on carbon to encourage polluters to reduce the amount of greenhouse gas they emit into the atmosphere.
- Carbon Credit: A permit that allows the holder to emit a certain amount of carbon dioxide or other greenhouse gases.
- Carbon Offset: A reduction in emissions of carbon dioxide or other greenhouse gases made in order to compensate for emissions made elsewhere.
- Carbon Market: A marketplace for trading carbon emission allowances.
- Greenhouse Gas: A gas that contributes to the greenhouse effect by absorbing infrared radiation.
See Also
External links
- Medical encyclopedia article on Emissions trading
- Wikipedia's article - Emissions trading
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