Allowance Markets

Under EPA's cap and trade programs, allowances are allocated to regulated sources under an overall emissions budget that caps total emissions across all sources combined. Each allowance represents an authorization to emit one ton of emissions per allowance held in a compliance period. Anyone can transfer or purchase previously allocated allowances, including both regulated companies and members of the general public. EPA tracks allowance holdings and records transactions through CAMD Business System (CBS).

Buying and Selling Allowances

Allowances can be bought directly from a company, individual, or group who holds them, or through a broker. Additionally, SO₂ allowances under the Acid Rain Program can be purchased at the annual EPA Acid Rain Program SO₂ Allowance Auction. Except for the auction, EPA does not sell allowances.

Frequent Questions about Allowance Markets

Brokers

Brokers bring together parties that have allowances to buy and sell. Brokers are more appropriate for higher volume allowance transactions. The following list represents the brokers and exchanges that EPA knows about. The list is based on publicly available information and may not be complete. Mention of trade names or commercial entities does not constitute endorsement or recommendation for use. If you are a broker or exchange and would like to be added to the list, please let us know.

EPA's Acid Rain Program SO₂ Allowance Auction

Because the availability of allowances is crucial to ensure both the economic efficiency of the emissions trading program and the addition of new electric-generating capacity, Title IV of the Clean Air Act Amendments mandates that EPA hold or sponsor a yearly auction of allowances for a small portion of the total allowances allocated each year. The auction helps ensure that new units have a public source of allowances beyond those allocated initially to existing units. Moreover, in the early stages of the regulatory program, the auction helped provide price information to the allowance market.

Once a year, EPA auctions a certain number of SO₂ allowances. Utilities, environmental groups, allowance brokers, and anyone else interested in purchasing allowances can participate. Auction allowances are sold to the highest bidder until no allowances remain. Successful bidders are notified and listed on EPA’s website.

To bid in the EPA auction please see the How to Bid Factsheet in the Auction section of Clean Air Markets Forms page. 

Results of the Acid Rain Program SO₂ Allowance Auction »

Frequent Questions about the Acid Rain Program Allowance Auction