Cap and trade comes in two parts: a cap on total emissions and a system that allows trading to achieve that limit as cost-effectively as possible.

Abstract:

Cap and trade comes in two parts: a cap on total emissions and a system that allows trading to achieve that limit as cost-effectively as possible. The resulting market and price on emissions create incentives for reducing carbon pollution. Properly designed, carbon cap and trade can be a powerful tool in the fight to avert the most dangerous consequences of global warming. It has increasingly been shown as such around the world.

Full text: “Carbon Cap and Trade”

Citation:

Gernot Wagner. 2013. “Carbon Cap and Trade.” In: Encyclopedia of Energy, Natural Resource, and Environmental Economics, edited by Jason F. Shogren, Elsevier: 1-5.