Which of the following is an example of cap and trade?
A. Low-polluting countries reduce their pollution standards at a slightly lower rate than higher polluting countries. Those countries that meet their targets enter into mutually beneficial trade agreements.
B. Polluting Company X reduces its level of pollution and receives credit for the reduction. It then sells its credit to polluting Company Z, whose emissions exceed the regulatory limit.
C. The United States works with other countries to encourage lower thresholds of pollution, and those countries that reduce their levels for two years receive better trade agreements with the United States.
D. Company X, which does not pollute, trades information with Company Z, which does pollute, on ways in which Company Z can lower its pollution levels.
Answer: B
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