The Output-Based Pricing System sets a regulatory performance standard for each sector or activity under the system.
Facilities that are less efficient than the standard have to pay
Facilities that perform better than the standard earn credits that they can sell, or save for future use
The amount each facility pays depends on how much carbon pollution it emits to make one unit of product
If a facility finds a way to pollute less per unit, it will save money or earn credits. This creates a financial incentive for continuous reduction of carbon emissions.