Meaning of “cap and trade” in the English Dictionary

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"cap and trade" in Business English

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cap and tradenoun [ U ]

uk us ENVIRONMENT, SOCIAL RESPONSIBILITY

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%.

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