‘Cap and trade’ is the nucleus of the so-called flexible mechanisms of climate protection: the maximum use of a resource (here, a particular quantity of greenhouse gas emissions) is determined; from this, individual emission allowances are derived and allocated. Emission allowances can be traded—in other words, they can be purchased and sold. They can also be acquired by investing abroad, if this leads to a reduction of emissions. As elegant and perfect ‘cap and trade’ might appear, we have to ask whether this instrument meets the expectations it has raised. This can, however, be questioned. The article sketches out the ‘cap and trade’ system (Section 1), illustrates ‘cap and trade’s’ lack of success (Section 2) and explains its failure arguing that economic logic has supplanted ecological logic (Section 3). This argument is followed by a reflection on whether the approach should altogether be abandoned or reformed through putting it into a framework of the regulatory tradition (Section 4). The article takes Germany as a case where it is felt important to look at implementation at the national level.