Cool Mateformal10K+
Cap and trade
UK //kæp ənd treɪd//US //kæp ənd treɪd//
Definition
A market-based approach to controlling pollution by providing economic incentives for reducing emissions.
In simple words: A system to limit pollution by capping emissions and allowing trading of permits.
Examples
- Many countries have adopted a cap and trade system to control greenhouse gas emissions.
- The cap and trade model encourages companies to reduce pollutants to sell their excess allowances.
- Critics argue that cap and trade can lead to inequities in pollution distribution.
- Under the cap and trade program, businesses can buy and sell emission allowances.
- Cap and trade systems aim to incentivize companies to invest in cleaner technologies.
Usage notes
Use in environmental policy discussions. It’s appropriate in academic or professional contexts but may be too technical for casual conversation.
Grammar pattern
standalone term
Memory hint
Think of 'cap' as putting a lid on emissions and 'trade' as exchanging permits.
Collocations
- market-based approach
- emission allowances
- buy and sell
- reduce emissions
- environmental policy
Synonyms
- emissions trading
- carbon trading
- pollution permits
- environmental cap
- market mechanism
Common mistakes
- Confused with 'cap or trade', which is incorrect.
- Assuming it only applies to carbon emissions, ignoring other pollutants.
- Misunderstanding it as a tax rather than a trading system.