Emission trading scheme

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Environmental policy.

(ETS).

An administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.

For example, the European Union Emissions Trading Scheme (EU ETS) is a mandatory cap and trade scheme that requires Europe's heavy industries and power generators, as the continent's major emitters of carbon dioxide, to monitor and report annually on their carbon dioxide emissions and return an amount of emissions allowances to the government that represents each year's carbon dioxide output.


See also