Cap-and-Trade:
A recent study published in The Quarterly Journal of Economics confirmed that Surat’s Emissions Trading Scheme (ETS), the world’s first market for particulate emissions reduced pollution by 20–30% and lowered compliance costs by 11%.
- Cap-and-Trade is a market-driven environmental policy where the government sets a maximum limit (cap) on the total level of pollution that can be emitted by industries.
- Under this system, companies are issued pollution permits that allow them to emit a specific number of pollutants.
- If a firm emits less than its permitted share, it can sell its unused permits to other firms struggling to meet their limits.
- This creates a financial incentive for industries to reduce pollution efficiently and invest in cleaner technologies, as doing so can turn into a profit opportunity.
