Carbon Trading
Carbon trading is, effectively, a means of trying to cut down carbon dioxide pollution generated by any given entity or area. Essentially, carbon trading involves the concept of carbon credits, which are incentives (ECONOMIC incentives) that encourage people to reduce the amount of carbon dioxide they emit. What happens in this system (colloquially known as “cap and trade”) is that a government body would put a limit on how much carbon certain entities within their jurisdictions can emit.
Carbon credits, in the context of carbon trading, is essentially the predetermined amount of carbon that companies and other groups can emit – carbon credits are put in what is called carbon permits. In the carbon trading system, these companies are given the right to generate a specific amount of carbon, but never more than that. If they feel that they cannot help but generate more carbons than they are allowed, then the carbon trading system allows for them to BUY MORE CREDITS from companies that produce carbon well below their allowable credit. When you thing about it, what this means is that businesses must PAY in order to pollute, which, when considered very carefully, is not a very appetizing thought.
For more on carbon trading, please wait for this section to be updated.