Emissions trading (also known as cap and trade) 

A market-based policy instrument that allows companies or governments to buy and sell allowances or credits that permit the emission of a certain amount of greenhouse gases (GHGs). The overall goal of emissions trading is to limit total emissions within a defined region, sector, or group of companies, while providing economic incentives for participants to reduce emissions more cost-effectively. It is designed to encourage innovation and investment in low-carbon technologies. An example of emissions trading is the EU Emissions Trading Scheme (ETS).