Cap and trade works like this:
1) everyone has an equal right to pollute up to a certain emissions cap.
2) dirty companies must clean up and upgrade equip and fixtures sufficient to come in under the cap, or pay the tax.
2.5) the cap slowly gets lowered, prompting companies to improve operations slowly over time
3) companies who have newer facilities have an advantage, because they pollute less, and if they come in under the cap, they have extra credits to sell on the carbon market (many already exist in the US). They can sell extra credits to companies who are over, and companies who are over can relenquish these credits back to the govt for a "pass" on their pollution overages.
4) Thus, as the cap is slowly lowered (by reducing credits distributed), companies using older equip will eventually find it necessary to upgrade operations, because less credits on the market means higher price to buy compliance. When the price of credits is greater than the price to bring your facility into the 21st century, you will upgrade or operate at a loss.
5) All the while, this simultaneously drives the new tech market, because companies will be actively be seeking a good deal on new cleaner tech.