Emission trading goes online

The US Environmental Protection Agency (EPA) has debuted an online system, dubbed the Online Allowance Transfer System (OATS) that will enable participants in the sulphur dioxide (SO2) and nitrogen oxide (NOx) markets to record trades directly on the Internet instead of submitting paper forms to EPA for processing.

A trading unit is called an allowance and is equivalent to one ton of air emissions. EPA's tracking systems, which currently hold allowances with a combined value over $20 billion, record official SO2 and NOx allowance transfers under existing emission cap and trade programs. Anyone anywhere in the world can participate in the market, and hundreds of companies, brokers and individuals are already engaged in trading.

As a prerequisite to trading, however, the EPA requires rigorous monitoring and reporting standards, and mandates that companies pay automatic fees to the government for any emissions above the legal limit. Rigorous monitoring is essential to ensuring certainty and consistency in the program, making sure that each allowance traded represents one ton of emissions, regardless of where it is generated.

Additional cap and trade programs have been proposed by the US Congress to reduce electricity industry emissions in the United States, and dozens of countries around the world are considering implementing such programs.

For information on registering for access to online trading, visit: http://www.epa.gov/airmarkets/transfer/index.html