A policy under which a regulatory or international body sets a limit (cap) on the amount of pollution (e.g., greenhouse gases) that can be emitted during a certain period by certain entities. Depending on the regulatory authority, these entities might represent industrial sectors or a group of nations. The cap is divided into permits for the right to emit a part of the capped pollution. The permits have transferable titles (ownership), which allows for exchange of permits. (Not to be confused with offsetting. See carbon offset.)