Question

In a cap-and-trade system, ______ set(s) a regulatory cap (limit) on emissions and issue(s) pollution permits, and ______ can buy, sell, and trade these permits with others.

Answer 1

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In a cap-and-trade system, the government set(s) a regulatory cap (limit) on emissions and issue(s) pollution permits, and polluters can buy, sell, and trade these permits with others.

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In a cap and trade system, the government sets an emissions cap and issues a quantity of emission allowances consistent with that cap. Emitters must hold allowances for every ton of greenhouse gas they emit. Companies may buy and sell allowances, and this market established an emissions price.

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