4 FAQs about Emissions trading explained

What is emissions trading?

Emissions trading, an environmental policy that seeks to reduce air pollution efficiently by putting a limit on emissions, giving polluters a certain number of allowances consistent with those limits, and then permitting the polluters to buy and sell the allowances. The trading of a finite number

How do emissions trading systems work?

Emissions trading, also known as 'cap and trade', is a cost-effective way of reducing greenhouse gas emissions. To incentivise firms to reduce their emissions, a government sets a cap on the maximum level of emissions and creates permits, or allowances, for each unit of emissions allowed under the cap.

What is an Emissions Trading Scheme (ETS)?

An Emissions Trading Scheme (ETS) is a market-based, cost-effective approach to reducing greenhouse gas (GHG) emissions. Governments economically incentivise firms, corporations, and other entities to cut emissions by setting a limit on emissions and issuing permits within the limit that each allows for one tonne of GHG emissions.

How can emissions trading help reduce emissions?

Emissions trading can be an effective approach to reducing emissions to protect human health and the environment.

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