How does a carbon reduction scheme work?

A carbon reduction scheme typically involves setting a limit on the total amount of greenhouse gases that can be emitted by specific sectors or entities. This limit is often enforced through a cap-and-trade system, where companies can buy and sell emissions allowances, providing financial incentives to reduce emissions. Participants that reduce their emissions below their allotted cap can sell their surplus allowances to others that exceed their limits, promoting overall reductions in carbon output. Additionally, these schemes may support renewable energy projects and sustainability practices to further decrease carbon footprints.