Emission Markets
Evolution Markets has been a broker in U.S. emissions allowance and credit markets since its founding in 2000, and its founders participated in the formative stages of the market. Today, we cover all major emissions trading markets, whether federally run programs for sulfur dioxide (SO2) and nitrogen oxides (NOx), or regional programs allowing the trading of credits to meet local air quality standards. Evolution Markets offers trade execution services for actively traded allowance markets, as well as structured long-term emissions credit transactions. In addition, we work with our clients to manage environmental compliance risk through market hedging and help them identify latent environmental assets, which can be monetized in the market.
In an effort to address national air quality issues pertaining to acid rain and smog, the federal government operates a cap-and-trade program that controls the emission of SO2 and NOx from stationary sources.
The resulting programs have evolved over time and proven successful in meeting their goals. The nationwide Acid Rain Program controls SO2 emissions from power plants, and the Cross-State Air Pollution Rule (CSAPR) has additional controls on SO2 and annual and seasonal NOx emissions in 28 states. Regulated entities are given allowances equal to the amount of their permitted emissions, and entities are able to freely trade these allowances, which are transferred in U.S. Environmental Protection Agency (EPA) accounts. Market participants include utilities, power generators, banks, and other financial entities, all of which are exposed to underlying allowance price risk.
Evolution Markets offers an efficient over-the-counter marketplace for transacting emissions allowance trades, as well as executing risk management strategies.
To learn more about SO2 and NOx markets, contact: +1 (914) 323 0255, emissionsdesk@evomarkets.com.
Air pollution in certain areas in south Texas is an acute problem. In response, the Texas Commission on Environmental Quality (TCEQ) has implemented a cap-and-trade program subjecting all stationary sources with at least 10 tons of NOx emissions per year located within an eight-county region, including Harris (in which Houston resides), Galveston, and Brazoria counties.
Allowances are allocated on an annual basis and cover emissions from January 1 through December 31 of each year. The TCEQ will subtract allowances from each account based on the unit's actual emissions. This "true up" will occur in the first quarter of the year following the compliance period.
Allowances can be sold to other regulated sources in the region that are exceeding their targets or new sources that need to offset their anticipated emission levels.
Continued investment in the energy and petrochemical sectors in the Houston-Galveston region has led to an active trading market, and Evolution Markets offers market participants a cost-effective means to source credit supply or monetize excess credit assets.
To learn more about the Houston emissions market, contact: +1 (914) 323 0255, emissionsdesk@evomarkets.com.
Some of the very first emissions cap-and-trade markets were established in California in the 1980s. The market remains a vital tool in the State’s efforts to control air pollution contributing to smog and other environmental challenges.
California operates a number of discreet regional emissions markets, each with their own targeted pollutants and regulated sources. The largest is the South Coast market, which includes Los Angeles County and nearby cities. The South Coast Air Quality Management District manages the RECLAIM allowance program, which caps NOx and SOx emissions from regulated sources.
The South Coast also has an emissions reduction credit program for criteria pollutants, such as particulate matter (PM10). Similar credit trading programs are in place in the San Joaquin Valley and the Bay Area.
Our California-based team is the industry’s most experienced and has capabilities to facilitate trades in all of the State’s major emissions programs.
To learn more about California emissions markets, contact: +1 (949) 496 8000, caemissions@evomarkets.com.
Emission Reduction Credits (ERCs) are required for new major emission sources, or sources undergoing major expansions, by various state air agencies in regions that do not meet the EPA's national ambient air quality standards (NAAQS).
Offsets are available for a variety of pollutants, including NOx, volatile organic compounds (VOC), carbon monoxide (CO), particulate matter, and reactive organic gases (ROG). Sources required to procure ERCs to "offset" their projected new emissions can buy from existing sources that have retired or over-complied.
Twenty five states currently have active ERC trading programs. Counties within each state have different nonattainment designations, and corresponding offset ratios.
Additionally, each state has different ERC expiration dates, as well as different inter-pollutant and inter-state trading rules. ERC transactions are usually complex and must be customized to address a buyer's specific requirements, and Evolution Markets excels at navigating the ERC landscape.
To learn more about ERC markets, contact: +1 (914) 323 0255, emissionsdesk@evomarkets.com.