It is a market based approach to encourage the reduction of CO₂ entering atmosphere –

Correct option is B

The correct answer is (B) Carbon trading

Explanation:
• Carbon trading, also known as emissions trading, is a market-based system designed to reduce greenhouse gas emissions by putting a price on carbon.
• Under this system, a central authority (usually a government) sets a limit (cap) on the amount of a pollutant that can be emitted.
• Companies are issued emission permits and are required to hold a number of permits (or allowances) equivalent to their total emissions.
• Companies that reduce their emissions below their limit can sell their excess permits to companies that exceed their limits, creating a financial incentive for pollution reduction.
• This approach is often referred to as 'cap-and-trade' and was popularized by the Kyoto Protocol and later the Paris Agreement.

Information Booster:
• One carbon credit usually represents the right to emit one tonne of carbon dioxide or an equivalent amount of different greenhouse gases.
• The European Union Emissions Trading System (EU ETS) is currently the world's largest multi-country carbon trading system.
• Carbon offsets are a related concept where an entity funds projects that reduce emissions elsewhere (like reforestation) to compensate for its own emissions.

Additional Knowledge:
• Carbon fixation (Option A): The process by which inorganic carbon (CO₂) is converted into organic compounds by living organisms, primarily through photosynthesis.
• Carbon exchange (Option C): A general term that can refer to the exchange of carbon between different reservoirs (atmosphere, ocean, land) or sometimes used loosely for carbon trading platforms.
• Carbon cycle (Option D): The biogeochemical cycle by which carbon is exchanged among the biosphere, pedosphere, geosphere, hydrosphere, and atmosphere of the Earth.