Baseline-and-credit
ESG & GovernanceA trading system that sets a benchmark for each participant and issues credits to those that beat it, which others can buy to cover a shortfall.
Benchmarks are often set as intensity (emissions per unit of output), so total emissions are not capped. A participant pays only for the gap between its actual performance and its benchmark, and earns credits for beating it. India's CCTS compliance mechanism and its earlier PAT scheme are baseline-and-credit systems.
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