Question

One proposed solution to climate change is to implement a cap-and-trade system on carbon dioxide (CO2). Explain how this system might work and how it would lead to reduced CO2 emissions.

Answer 1

A cap-and-trade system sets a limit on CO2 emissions and allows companies to trade emissions permits. This creates an incentive for companies to reduce emissions and promotes the use of cleaner technologies.

Step-by-step explanation:

A cap-and-trade system on carbon dioxide (CO2) is a market-based approach to reducing emissions. It sets a limit, or cap, on the amount of CO2 that can be emitted by certain industries. Each company is allocated or must purchase a certain number of emissions permits based on its emissions allowance. If a company emits less than its allowance, it can sell its extra permits to companies that exceed their allowances.

This system creates a financial incentive for companies to reduce their emissions because they can profit from selling unused permits. It also encourages the development and implementation of cleaner technologies and practices. Over time, as the cap is lowered, the total amount of emissions decreases, leading to reduced CO2 emissions.