Greenhouse Gas markets

This solution was shared by PRE-LAUNCH RESEARCH TEAM
14 May 2021

Description of the innovative solution

Finance

Greenhouse gas markets, also known as cap-and-trade policies, are proposed as a solution to mitigate climate change in a way different from more traditional regulatory or voluntary mechanisms for reducing emissions. Cap and trade involves the establishment of a limit for total amounts of a pollutant by a regulatory group, and the distribution of this total in the form of allowances to the various polluters. In theory, with the right 'cap,' this will force a reduction in emissions. The 'trade' aspect is intended to make this reduction of emissions more efficient, letting firms that are better...

Greenhouse gas markets, also known as cap-and-trade policies, are proposed as a solution to mitigate climate change in a way different from more traditional regulatory or voluntary mechanisms for reducing emissions. Cap and trade involves the establishment of a limit for total amounts of a pollutant by a regulatory group, and the distribution of this total in the form of allowances to the various polluters. In theory, with the right 'cap,' this will force a reduction in emissions. The 'trade' aspect is intended to make this reduction of emissions more efficient, letting firms that are better able to reduce emissions do so, and rewarding them, with the ability to sell their permits to those who are less able to reduce emissions. The agricultural sector could participate in these markets by, for example, using methods that sequester carbon, and selling these benefits on the market.

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Emissions trading worldwide International Carbon Action Partnership (ICAP)
Scientific paper
ICAP's Emissions Trading Worldwide Status Report 2021 shows significant growth in the coverage of emissions trading systems (ETSs) with the launch of the China National ETS.
Shared by PRE-LAUNCH RESEARCH TEAM

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