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Emissions trading is a relatively new and creative market approach to reducing pollutant emissions by allowing entities to trade emission allowances or credits issued by the government. An entity operating within the pollution standard, which refers to the levels of specific pollutants that are allowed in the ambient air and water in a particular location or from specific sources, can sell or trade its credit or allowance to an entity that cannot meet that standard. The overall pollution emission levels in an area or at a specific source must meet the specified standard.

Emissions trading permits greater flexibility in meeting state emission standards. Flexible emissionstrading programs are designed to capitalize on the efforts of entities able to reduce their emission levels below the level required by ...

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