Emissions Trading System

Emissions Trading System or ETS is a market-based instrument that provides incentives for reducing emissions. Under this system, the governments allocate or sell a limited number of permits that allow for the discharge of a specific quantity of a specific pollutant during a particular period of time. To increase their emissions, the polluters are required to purchase the permits from those who are willing to sell them. Britain recently initiated its domestic ETS to meet the 2050 emission target.


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