If what we're trying to achieve here is decreasing GHG emissions, then that's what the cap should be on. There are definite possibilities of decoupling production from emissions. It's not certain at this moment if these possibilities will be economic in the long term.
It's possible that at some point decreasing emissions will necessarily be decreasing production as well, but it would be better to leave that flexibility to the private sector to see whether they can manage the production with the cap on emissions rather than the cap on production. That relates to my comment on the accurate measurement of these emissions. If things are not well measured, then you might want to have a cap on something that's easier to measure and, of course, the production is easier to measure than the emissions.