Description

The Emission Trading Scheme (ETS), also known as a cap-and-trade system, is a market-based approach designed to reduce greenhouse gas emissions by creating economic incentives for pollution control. Under this system, a regulatory authority sets a cap on the total amount of emissions permitted and issues a limited number of tradable emission allowances. Regulated organizations must obtain and surrender allowances equal to their actual emissions, encouraging them to adopt cleaner technologies and improve energy efficiency. By allowing the trading of emission permits, ETS provides a cost-effective mechanism for achieving environmental goals while supporting sustainable economic growth.