Power Sector Greenhouse Gas Cap and Trade – A power sector greenhouse gas (GHG) cap and trade program is a market–based policy tool for regulating GHG emissions from the power sector. A cap and trade program first sets a cap, or maximum limit, on emissions. Sources covered by the program then receive authorizations to emit in the form of emission allowances, with the total amount of allowances limited by the cap. Each source can design its own compliance strategy to meet the overall reduction requirements, such as selling or purchasing allowances, installing pollution controls, and implementing efficiency measures. A cap and trade program does not specify individual control requirements, but each emission source must surrender allowances equal to its actual emissions in order to comply.