Q: What is carbon emission trading?

Emission permits are known as “cap and trade.”

A cap on emissions is set and then permits are created up to the level of this cap by a central authority (the government), in consideration of both industrial and economic conditions.In other words, a country or a company emitting a large amount of greenhouse gas is set limit or cap on the amount of a pollutant that may be emitted.

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Next, let me explain about emission trading.

In order to reduce greenhouse gas emission, it is a system which a company or a country is allowed to sell the remaining part of its permit in case it is successfully able to control its emission within its quota, or to buy some more permit in case a company or a country fails to control its emission within its quota.

Now we can see more cases which domestic companies buy emission permit from overseas countries, however, the government is preparing a creation of a trading system restricted within Japan in the future.

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