The whole cap and trading system has been a little hard to comprehend as it is a multi-faceted approach i.e. requiring participating companies to exchange carbon-credits in an effort to reduce their overall pollution.  The problem I had in understanding the concept was centered upon the “incentives” portion that would allow participants to actually profit in economical terms aside from the moral and ethical gains as to participating.  What I’ve learned is that participating companies can profit in a hard-cap and trading system through updating their business practices either in the form of supply chains, manufacturing, etc.  In a hard-cap and trading system, set limits on emission outputs would be required and once a company’s emission output falls below that set limit then emission credits are issued to that company and they can then sell them to other participating companies whose emission output is above the set limit.  At this point the company being issued carbon credits can recoup the costs incurred in reducing their emission output and start generating profits.