Controlling the level of pollution is one of the cornerstones of protecting our environment from greenhouse gases. Emissions trading emerged as a market-oriented approach to do just that. Let’s break down the definition of the term and how it has transformed throughout the years.
Emissions Trading: Definition
Emissions Trading: Definition
Emissions trading, also known as cap and trade (CAT) or emissions trading scheme (ETS), is a way to reduce pollution of our planet. The concept can often be found in the definition of carbon offsetting, as it provides economic incentives for decreasing CO₂. Other harmful gases include:
- methane;
- nitrous oxide;
- hydrofluorocarbons;
- perfluorocarbons.
Emission trading schemes like this help battle climate change and motivate companies to pay attention to their effect on the environment.
Evolution of the Term
The first concept of the approach was showcased by a series of microeconomic computer simulation studies for the National Air Pollution Control Administration. Between 1967 and 1970, Ellison Burton and William Sanjour helped define decarbonisation with their outstanding findings. Then, there were three phases where emission traders made history:
- 1977 – The Clean Air Act, which introduced the first developments of carbon emissions trading certificates to offset the pollution. Creation of the first concept for the energy transition definition by the US President Jimmy Carter in his “Address to the Nation of Energy.”
- 1990 – The first “cap-and-trade” system is launched in the US, changing the history of environmental policies around the world.
- 2000s-Now – Branching out from the United States and going global. The European Union adopted the new climate policy through the Net-Zero 2025.
Now, emissions trading systems are in full force, and more companies are expected to join in the race to the global net-zero initiative.
DTEK’s Steps Toward Emission Trading
DTEK takes a proactive part in minimising greenhouse gases. In 2017, the World Bank and DTEK began collaborating on the Partnership for Market Readiness project to develop a GHG emission monitoring and reporting plan for TPPs to participate in the national GHG trading scheme. In 2025, DTEK issued carbon credits, available for everyone who wants to offset their emissions.