• Energy quota and trading programs are designed to progressively reduce pollution by giving companies an incentive to invest in cleaner alternatives.
  • The government issues a set number of permits to companies that include a limit on carbon emissions.
  • Companies that exceed the limit are taxed, while companies that reduce their emissions can sell or swap unused credits.
  • The overall limit (or cap) of pollution credits is decreasing over time, giving corporations an incentive to find cheaper alternatives.
  • Critics say caps could be too high, giving companies an excuse to avoid investing in cleaner alternatives for too long.