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Tradable pollution permits are regulated allowances that allow producers to generate pollution. If pollution over the permitted allowance is created, a fine will occur. If firms find they produce less pollution than allotted, they can sell the excess permits to another firm for money.
Tradable pollution permits are so-called cap and trade schemes. They give companies a legal right to pollute a certain amount per fixed time span. Firms that pollute less can then sell their leftover pollution permits to firms that pollute more.
There are two alternative systems of marketable pollution permits, namely ambient-permit system (APS) and emissions-permit system (EPS)(2).
The most emblematic example of a tradable permit market for controlling pollutant emissions is the one for sulphur dioxide (SO2) emissions from thermal power plants in the United States. These emissions are responsible for acid rain (the Acid Rain programme)1.
Tradeable pollution rights are emission allowances or permits which can be traded between organisations whose operations generate pollution.
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Answer and Explanation: Emissions taxes are leveraged by the government as a charge to limit greenhouse emissions. The tradable emissions permits are distributed by a governmental body to permit a certain level of pollution from a specific source over a period of time.

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