An emissions trading system (ETS) permits a high allocation of free allowances to energy-intensive companies. The most likely objective of this practice is to:
A.
maintain a low unit price for emissions.
B.
prevent the offshoring of emissions into other jurisdictions.
C.
increase the quantity of emissions allocated to the participants in the ETS.
Free allowances in an ETS are often allocated to energy-intensive companies to prevent the offshoring of emissions, also known as "carbon leakage," where companies relocate to jurisdictions with laxer environmental regulations. (ESGTextBook[PallasCatFin], Chapter 3, Page 153)
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