In an emissions trading scheme, a central authority or governmental body allocates or sells a limited number of permits that allow a discharge of a specific quantity of a specific pollutant over a set time period. Polluters are required to hold permits in amount equal to their emissions.

How does the emissions trading system work?

Emissions trading programs work by first setting an environmental goal: a national, or sometimes regional, limit on the overall amount of pollution that sources are allowed to emit into the environment. ... Provides stability and predictability to the public, to affected sources, and to the allowance trading market.

What is the purpose of 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.