It’s kind of like a carbon stock market. Governments come up with a cap on how many carbon emission countries can make. Since the thing that matters most is that the country doesn’t exceed the cap, companies who have cut down on emissions can sell or trade government issued permits to make emissions to companies that aren’t reducing their carbon pollution. Ideally governments will issue less permits as the years go on and the permits will become more expensive while more companies will feel pressure to reduce pollution.
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