Cap and dividend

Imagine you have a toy box with a bunch of toys inside. You like to play with these toys, but sometimes you might want to share them with your friends. To make sure everyone gets a fair turn playing with the toys, your parents came up with an idea. They put a lid, or a "cap," on the toy box, and they made a rule that you can only take out one toy at a time to play with.

The same idea applies to the environment! There are certain things, like air pollution, that we need to limit, or put a "cap," on so we don't damage the environment too much. When companies use energy to make products and produce pollution, they might need to buy special permits, or allowances, for how much pollution they can produce. This makes sure that they don't produce too much pollution that would hurt the environment.

Now, the "dividend" part comes in when we collect money from companies for these permits. Instead of keeping all of the money, we divide it evenly among everyone, just like you would divide the toys among your friends. That way, everyone gets a little bit of money from the companies who use energy and produce pollution. This is called "cap and dividend." It helps the environment, makes sure companies don't produce too much pollution, and gives everyone a little extra money!