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Emissions trading (or cap and trade) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. In such a plan, a central authority (usually a government agency) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups that emit the pollutant are given credits or allowances which represent the right to emit a specific amount. The total amount of credits cannot exceed the cap, limiting total emissions to that level. Companies that pollute beyond their their allowances must buy credits from those who pollute less than their allowances. This transfer is referred to as a trade. In effect, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions. The more firms that need to buy credits, the higher the price of credits becomes -- which makes reducing emissions cost-effective in comparison.

The overall goal of an emissions trading plan is to reduce pollution. In some cases, the cap may be lowered over time. In other systems a portion of all traded credits must be retired, causing a net reduction in emissions each time a trade occurs. In many cap and trade systems, organizations which do not pollute may also buy credits. Environmental groups that purchase and retire pollution credits reduce emissions and raise the price of the remaining credits as per the law of demand.

Because emissions trading uses free markets to determine how to deal with the problem of pollution, it is often touted as an example of effective free market environmentalism. While the cap is usually set by a political process, individual companies are free to choose how or if they will reduce their emissions. Moreover, the government does not need to regulate how much each individual company emits, making cap and trade a very cost-effective method of controlling pollution on a large scale.

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Climategate - Copenhagen And The €5 Billion Carbon Trading Fraud http://wp.me/pE1rC-UO
ToryAardvark (Tory Aardvark) Thu, 17 Dec 2009 13:35:15 -0000
Climategate - Copenhagen And The €5 Billion Carbon Trading Fraud http://wp.me/pE1rC-UO
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Rat_des_champs (Rat_des_champs) Thu, 17 Dec 2009 13:18:09 -0000
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Rat_des_champs (Rat_des_champs) Thu, 17 Dec 2009 13:17:52 -0000
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Carbon Trading - real #climate solution?Vote NOW #QuickPolls at VoteGlobal.com #GotPolitics? http://bit.ly/6i2HMt #COP15
votegloblafrica (Vote Global Africa) Thu, 17 Dec 2009 13:09:02 -0000
Carbon Trading - real #climate solution?Vote NOW #QuickPolls at VoteGlobal.com #GotPolitics? http://bit.ly/6i2HMt #COP15
Carbon Trading - real #climate solution?Vote NOW #QuickPolls at VoteGlobal.com #GotPolitics? http://bit.ly/6i2HMt #COP15
VoteGlobalPolls (Vote Global Polls) Thu, 17 Dec 2009 13:08:59 -0000
Carbon Trading - real #climate solution?Vote NOW #QuickPolls at VoteGlobal.com #GotPolitics? http://bit.ly/6i2HMt #COP15
Climategate: European Carbon Credit Trading System Plagued by Fraud http://bit.ly/6daTEb
pundicity (Pundicity) Thu, 17 Dec 2009 12:42:36 -0000
Climategate: European Carbon Credit Trading System Plagued by Fraud http://bit.ly/6daTEb

 
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