An Emission Trading System (ETS) is a market-based approach used to control pollution by providing economic incentives for reducing emissions of pollutants. Under this system, governments set a cap on the total amount of greenhouse gases that can be emitted. Companies are allocated or can buy emission allowances, which they can trade with one another. This creates a financial incentive for companies to reduce their emissions, as they can sell any unused allowances. The goal of an ETS is to reduce overall emissions in a cost-effective manner while promoting innovation in cleaner technologies. By allowing flexibility in how companies meet their emission reduction targets, the system encourages investment in sustainable practices and helps combat climate change. Examples of ETS include the European Union's EU ETS and California's Cap-and-Trade Program.