How does trading in pollution work?

Carbon dioxide and other greenhouse gases are being emitted in huge
volumes all over the planet and are highly concentrated in rich
countries. These additions to the atmosphere last for many years,
accumulating and trapping more of the suns energy. Thankfully some
sensible people in the UN and Brussels have decided to take control of
the situation. Rich countries and large commercial sources of
greenhouse gases are now legally prevented from emitting more than a
fixed amount in a given year – their emissions are capped. But because
it doesn’t really matter to planet earth where emissions of greenhouse
gases occur – they all eventually do the same thing: heat the planet up
- the regulators have said if you have to emit more than your cap, you
can, but you have to find someone else who is prepared to emit less
than their cap to sell you their permit to emit. And this market in
buying and selling pollution permits is now underway, governed by rules
set periodically by the UN and Europe.