year two.
Plant A still produces 2,000,000 tonnes.
Plant B invested some of its profits from selling excess emissions from quota into better emissions controls. Plant B only emits 400,000 tonnes this year.
Quota is lowered from 1,000,000 tones to 900,000.
Plant B sells Plant A 500,000 again.
Plant A now has to buy 1,100,000 tonnes. 500,000 from Plant B and 600,000 from other sources or be fined.
Net emissions (A+B) drop from 2,500,000 to 2,400,000.
Repeat until Plant A becomes unprofitable due to high cost of fines and quota buying and is shut down.