Carbon trading is a market-based system aimed at reducing greenhouse gas emissions. It is based on the principle of "Cap and Trade."
The "Cap": The government sets a limit (cap) on the total amount of greenhouse gases that can be emitted by all participating industries.
The "Trade": Companies are issued emission permits. If a company emits less than its limit, it can sell its excess permits to another company that is struggling to stay within its limit.
Goal: It provides a financial incentive for companies to invest in cleaner technology, as reducing emissions becomes a source of revenue.
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