Carbon trading

Carbon trading creates tradable units representing permission to emit, or verified reductions of, greenhouse gases. Cap-and-trade systems set an overall limit and let regulated entities buy or sell allowances; crediting systems generate units from qualifying reduction projects. Switzerland operates market-based climate instruments and links relevant mechanisms with international policy developments. Key legal issues include allocation, monitoring, reporting, verification, registry integrity, fraud prevention and treatment of offsets. Carbon trading is distinct from a carbon tax, though both may coexist within climate regulation.