Written by the Fiveable Content Team • Last updated September 2025
Verified for the 2026 exam
Verified for the 2026 exam•Written by the Fiveable Content Team • Last updated September 2025
Definition
A carbon trading system is a market-based approach to reduce greenhouse gas emissions. It allows companies or countries to buy and sell permits that represent the right to emit a certain amount of carbon dioxide or other greenhouse gases.
An international treaty signed by almost every country in the world, aiming to combat climate change by limiting global warming to well below 2 degrees Celsius above pre-industrial levels.
United Nations Framework Convention on Climate Change (UNFCCC): An international environmental treaty that provides the overall framework for intergovernmental efforts to tackle climate change, including negotiations and agreements like the Paris Agreement.
Emission Permits: Certificates issued by governments or regulatory bodies that allow companies or countries to emit a specific amount of greenhouse gases.