‘Cap and Trade’

‘Cap and Trade’ is a common term for a government regulatory program designed to limit, or cap, the total level of emissions of certain chemicals, particularly carbon dioxide, as a result of industrial activity.

• The cap on greenhouse gas emissions that drive global warming is a firm limit on pollution. The cap gets stricter over time.
• The trade part is a market for companies to buy and sell allowances that let them emit only a certain amount, as supply and demand set the price. Trading gives companies a strong incentive to save money by cutting emissions in the most cost-effective ....