society
Many governments now put a price on pollution by making companies buy permits for each ton of carbon dioxide they release, with the total number of permits capped and shrinking over time.
Cap and trade, also called emissions trading, is the tool described here. Regulators set a total cap on how much carbon dioxide companies in covered industries may emit, issue a matching number of permits, and shrink that cap over time; companies that emit less than their allotment can sell spare permits to those needing more, creating an incentive to cut emissions wherever it is cheapest.
Quantitative easing is a central bank tool for stimulating an economy by buying assets and expanding the money supply, and rent control is a policy limiting how much landlords can raise rents; neither involves capping pollution or trading permits.
The European Union's system, launched in 2005, is the largest carbon market of its kind in the world and has served as a working model that other regions and countries have studied or adapted when designing their own emissions-trading programs.
society
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