The carbon market refers to emissions trading. In an effor to reduce pollution, governments are setting up a cap and trade method for controlling emissions. The cap is the maximum emissions allowed, and this cap is supposed to continue to decrease. You can get carbon credits for being more eco-friendly, and these credits can be bought by companies who exceed the cap limitation. Some environmental groups protest that this is not an effective way to reduce pollution, since many of the more destructive companies will simply try and buy their carbon credits rather than work to reduce emissions.
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