Cap and Trade System

{
  "id": "MLC-T-ENV-004073",
  "term": "Cap and Trade System",
  "field": "Environment",
  "definition": "1. A policy approach for controlling large amounts of emissions from a group of sources. The approach first sets an overall cap, or maximum amount of emissions per compliance period, for all sources under the program. The cap is chosen in order to achieve a desired environmental effect. Authorizations to emit in the form of emission allowances are then allocated to affected sources, and the total number of allowances cannot exceed the cap. Individual control requirements are not specified for sources; instead, sources report all emissions and then surrender the equivalent number of allowances at the end of the compliance period. Allowance trading enables sources to design their own compliance strategy based on their individual circumstances while still achieving the overall emissions reductions required by the cap.\n\n2. A market based pollution control system in which total emissions of a pollutant are capped at a specified level. Allowances are issued to firms and can be bought and sold on an organized market or OTC.",
  "references": [
    "EPA Cap and Trade Essentials at http://www.epa.gov/capandtrade/documents/ctessentials.pdf",
    "U.S. Commodity Futures Trading Commission Glossary"
  ],
  "url": "https://mlchart.com/terminology/environment/cap-and-trade-system/"
}