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Collaboration and Carbon Trading

Carbon trading, although still ramping up, is an interesting area of collaboration between companies in the green space. Governments usually have the role of regulating carbon emissions through systems such as cap and trade. In a cap and trade system, the regulatory body sets a limit or cap on the amount of pollutant a company can emit. Companies are issued emission permits and are required to hold an equivalent number of allowances (or credits), which represent the right to emit a specific amount. The total of allowances and credits cannot exceed the cap (the total emissions). Companies that need to increase emissions can buy credits from companies that pollute less. A purchase of credits is the trade. Chapter 4 goes into more detail on carbon trading as a way for organizations to collaborate in reducing the total amount of greenhouse gases.

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