emissions trading, definition of

Emissions Trading

This is an economic incentive-based alternative to command-and-control regulation. In an emissions trading program, sources of a particular pollutant (most often an air pollutant) are given permits to release a specified number of tons of the pollutant. The government issues only a limited number of permits consistent with the desired level of emissions. The owners of the permits may keep them and release the pollutants, or reduce their emissions and sell the permits. The fact that the permits have value as an item to be sold or traded gives the owner an incentive to reduce their emissions.

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Emissions Trading

Emissions trading or cap and trade is usually a government-mandated, market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants.


This is often associated with carbon trading to allow polluters to 'offset' their pollution by buying equivalent carbon credits.

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emissions trading definition.
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