Clean Air Markets
Allowance trading allows participants in cap and trade programs to adopt the most cost-effective strategy to reduce emissions. Participants that reduce their emissions below the number of allowances they hold may trade allowances, sell them, or bank them for use in future years.
While all transactions are important to proper market operation, EPA follows trends in transactions between distinct economic entities with particular interest. These transactions represent an actual exchange of assets between unaffiliated participants, which reflect companies making the most of the cost-minimizing flexibility of emission trading programs by finding the cheapest emission reductions not only among their own generating assets, but across the entire marketplace of power generators.