At the end of each year, the company must have at least as many allowances as its annual emissions. In any year that it exceeds compliance levels, the company receives emissions penalties and either has allowances deducted immediately from its accounts or must submit a plan to the EPA that specifies how the excess emissions will be offset. In many cases, the program has enabled companies to reduce their emissions. But the new amendments expand the trading program. The problem is that there are no guidelines to equate or quantify these different credits.
Individual states are responsible for implementing and approving trades.
But there's got to be rules. In going ahead with this proposal, notes Ruch, the EPA is overriding the Office of the Inspector General, which found the same weakness. But the EPA is willing to allow an apple to be traded away for the promise of a future guava. And in areas that don't meet Clean Air Act standards, such as Chicago, a company can still continue to emit pollutants if it has enough allowances. Texas currently has a similar pollution trading program that allows industries to get air pollution permits without significantly reducing emissions.