If a particular manufacturer emits less pollution than its allotted cap, it gets an extra allowance and can sell it to other manufacturers. Which environmental policy or category governs this process?
Answers
What you are talking about is the cap-and-trade program.
This is a program that aims to lessen pollution produced by manufacturers and companies.
Every company is given a certain amount of pollution that they are allowed to emit. This is their cap. This cap is not constant but it decreases over time so that companies get to lessen their pollution emission through time as well.
However, there are some companies (e.g. company A) that produce very little pollution and those that produce a lot (e.g. company B). So, Company A sells their extra cap to Company B. This is the trade.
Cap and trade program: The program that states emissions trading or cap and trade to control pollution by providing economic incentives is called as a cap and trade program.
They are paid for for achieving reductions in the emissions of pollutants.
The government limit is called as the cap.
If a particular manufacturer emits less pollution than its allotted cap, it gets an extra allowance and can sell it to other manufacturers.
Hence, the cap and trade environmental policy governs the process.