Cap & Trade
Cap and trade is a market-oriented strategy to reduce greenhouse gas (GHG) emissions. Under this approach, a governing body assigns a limited number of permits that grant the holder the right to emit a specific quantity of GHGs during a designated time frame. Companies exceeding their allocated emissions limit must purchase additional permits from other entities willing to sell them, creating a market for emissions permits. This approach incentivises companies to reduce their emissions and provides flexibility for emissions management.