cap and trade

noun [U] ENVIRONMENT, SOCIAL RESPONSIBILITY

Definition

› a system that puts a limit on the amount of pollution companies can produce. Companies can buy and sell rights to put harmful gases into the air, meaning a company that reduces its pollution is financially rewarded: Cap and trade has been successful in reducing acid rain in the U.S. by more than 30%. cap and trade program/scheme/system → See also emissions trading

(Definition of cap and trade noun from the Cambridge Business English Dictionary © Cambridge University Press)