About Cap-and-Trade
Cap-and-trade is a system that uses a market-based approach to incent reduction in greenhouse gas (or carbon) emissions. Emitters, or those who release carbon into the atmosphere through their industrial processes, are assigned a cap or limit on the total amount of carbon they're allowed to emit. If an emitter exceeds their cap, they may buy emissions credits through a variety of trading tools.
When a cap-and-trade system is designed effectively, the demand for emissions credits drives the market price of carbon and influences business decisions, such as investment in efficient, low-carbon technologies.
