Cap and Trade

The Cap and Trade system involves trading of emission allowances, where the total allowance is strictly limited or 'capped'. A regulatory authority established the cap which is usually considerably lower than the historic level of emissions.

Source:

Climate Action Network International, "Climate Change Basics Glossary," Available Online at http://www.climatenetwork.org/climate-change-basics/climate-change-basics-glossary/?searchterm=glossary.  Retrieved October 27, 2008