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Emissions trading, also known as cap-and-trade, is a market-based approach used to control pollution by providing economic incentives for reducing emissions of pollutants. Under this system, a government or regulatory body sets a cap on the total level of greenhouse gas emissions permitted. Emission allowances or permits, each representing the right to emit a specific amount of pollutants (typically one metric ton of CO₂ or equivalent), are then issued. These allowances can be allocated freely or auctioned to polluting entities. Companies that reduce their emissions below their allowance __________ _________ _____ __________ ______ ____ ______.
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