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The EU Emissions Trading System (ETS) works on the ācap and tradeā principle. AĀ capĀ is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so thatĀ total emissions fall. Within the cap, companiesĀ receiveĀ orĀ buyĀ emission allowances, which they can trade with one another
