Carbon Permits

CARBON PERMITS MAY be issued to companies through governmental agencies, and allow companies to emit up to a specified level of CO2. The total number of issued permits from governmental agencies equals the national limit on emissions. CO2-generating companies may reduce emissions by using lower-carbon coals, or increasing the use of cleaner-generating plants. Generators that reduce emissions [Page 168]below their allotted levels can sell excess emissions permits to other generators. Other generators who exceed the limit of the permit may purchase permits at the market price, instead of reducing emissions, if it is more cost effective. Thus, companies that can easily reduce emissions will do so, and those for which it is harder will buy credits that reduce greenhouse gases at the lowest possible cost ...