What is a primary function of a cap and trade system?

A cap and trade system is designed to reduce overall pollution by establishing a limit, or cap, on emissions of specific pollutants. One of its primary functions is to create a market for emissions permits, which allows companies that have lower emissions to sell their unused allowances to companies that exceed their limits. This trading mechanism incentivizes emissions reductions where they are most cost-effective. As a result, it encourages companies to innovate and find ways to reduce their emissions, while also providing a financial incentive for those who can reduce their emissions more effectively.

The other options do not accurately describe the primary purpose of a cap and trade system. Limiting corporate taxes does not pertain to emissions management; sharing profits among organizations does not relate to environmental goals; and while funding renewable energy projects is important, it is not a direct function of cap and trade mechanisms. The essence of cap and trade is the flexibility it provides in managing emissions reductions efficiently through market-based approaches.