Clean Air Markets
Allowance trading allows sources in cap and trade programs to adopt the most cost-effective strategy to reduce emissions. Sources that reduce their emissions below the number of allowances they hold may trade allowances with other sources in their system, sell them to other sources on the open market or through EPA auctions, 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 across the marketplace.