Which of the following options correctly describe the "cap-and-trade" system for reducing greenhouse gas emissions? 

. A "cap" or upper limit is set for the emissions from the industries run by a given company. 

A company that produces less CO2 may trade its excess allowances to another company. 

If a company reaches its emission cap for the year its industries must stop operating. Companies may trade their annual allowances with each other. 

A company that produces less than its annual allowance of CO2 will have its cap reduced for the following year.

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