True. Cap-and-trade systems establish a limit, or “cap,” on the total amount of emissions allowed from certain pollutants. Businesses then trade emissions allowances amongst themselves, creating a market for pollution permits. This incentivizes businesses to find the most efficient ways to reduce their emissions in order to stay within their allotted limits or to profit from selling excess allowances. Therefore, cap-and-trade places the burden of finding efficient pollution reduction methods on businesses.
