Emissions trading is an economic solution to air pollution. A government agency sets a limit or "cap" on each pollutant. Companies that intend to exceed the limits may buy emissions credits from entities that are likely not to exceed the limits.

The United States began emissions trading after passage of the 1990 Clean Air Act, which authorized the Environmental Protection Agency to put a cap on how much Sulfur dioxide (which causes acid rain) the operator of a fossil-fueled plant was allowed to emit.

The Kyoto Protocol will bind ratifying nations to a similar system, with the UNFCCC setting caps for each nation. Under the proposed treaty, nations that emit less than their quota of greenhouse gases will be able to sell emissions credits to polluting nations.

Critics of the Kyoto Protocol see it as a means of forcibly redistributing wealth from the United States to the Third World. This is because the U.S., which produces 25% of the world's greenhouse gas emissions, would likely exceed its quota and would have to buy emissions credits from nations such as India and China.