Cap And Trade

Cap And Trade
A regulatory system that is meant to reduce certain kinds of emissions and pollution and to provide companies with a profit incentive to reduce their pollution levels faster than their peers. Under a cap-and-trade program, a limit (or "cap") on certain types of emissions or pollutions is set, and companies are permitted to sell (or "trade") the unused portion of their limits to other companies that are struggling to comply.

President Obama proposed a cap-and-trade system to reduce carbon emissions during his 2008 presidential campaign. A similar cap-and-trade system was included in the 1990 Clean Air Act, which is viewed by many as being instrumental in reducing sulfur-related acid rain. Opponents of cap-and-trade systems come from both sides of the environmental debate: environmental activists argue it doesn't do enough, while business advocates argue that its impact on companies' profits is too great.


Investment dictionary. . 2012.

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Look at other dictionaries:

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  • cap and trade — A policy that seeks to limit pollution. Under a cap and trade program, a company gets an emissions permit for every ton of carbon dioxide that it releases. Companies that produce fewer emissions can trade their extra permits to companies that are …   Law dictionary

  • cap-and-trade — a program for managing pollution by setting upper limits for allowable emissions and issuing permits that can be traded among various sources of emissions …   Useful english dictionary

  • cap and trade — The basis of the carbon trading mechanism. When an authority sets a limit or cap on something ( i.e. carbon dioxide (CO2) emissions) and allows those who exceed the limit to buy credits from those who have credits to spare. Exchange Handbook… …   Financial and business terms

  • Cap and Trade — Der Emissionsrechtehandel oder auch Handel mit Emissionszertifikaten ist ein Instrument der Umweltpolitik mit dem Ziel, Schadstoffemissionen mit möglichst geringen volkswirtschaftlichen Kosten zu verringern. In der Europäischen Union wurde der EU …   Deutsch Wikipedia

  • cap-and-trade — /kæp ən ˈtreɪd/ (say kap uhn trayd) adjective of or relating to an emissions trading scheme in which a cap is set for allowable emissions in a particular area, and individual emitters are given their allocation of emission permits which they can… …  

  • cap-and-trade — The basis of the carbon trading mechanism. When an authority sets a limit or cap on something ( i.e. carbon dioxide (CO2) emissions) and allows those who exceed the limit to buy credits from those who have credits to spare. Exchange Handbook… …   Financial and business terms

  • cap and trade — noun A market based approach to control pollution by providing economic incentives for achieving reductions in emissions, participating companies being assigned an emissions quota that can be traded with others if not used …   Wiktionary

  • Sign and trade — A sign and trade agreement is a type of contract allowed in the NBA collective bargaining agreement, wherein one team signs a player to a contract and trades him to another team. This is typically done to allow the eventual acquiring team to… …   Wikipedia

  • Trade — A verbal (or electronic) transaction involving one party buying a security from another party. Once a trade is consummated, it is considered done or final. Settlement occurs 1 5 business days later. The New York Times Financial Glossary * * * ▪ I …   Financial and business terms

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