What is "Cap and Trade"?

Trading carbon rights as financial commodities is carbon trading. It uses market mechanisms to promote the project of cooling the earth, with the purpose of turning environmental protection from concept into action.

At present, major economies such as the United States, China, and the European Union have carbon trading markets. There are two types of transactions. One is Allowance-based transactions. Carbon rights can be traded in the market. This kind of transaction is carried out by the government to allocate carbon rights, and companies that cannot use up carbon rights can sell their excess carbon rights to large carbon emitters.

The other is called project-based transactions, which is to trade carbon rights internationally obtained through emission reduction projects to achieve performance.