(B.) Market Construct

Having assessed compliance needs and weighed options in the marketplace; the next step is to prepare for entrance into the emissions trading markets. This begins by establishing an account. The U.S. Acid Rain Program requires that participants register with the EPA in its Allowance Tracking System (ATS). The ATS is administered by the EPA Acid Rain Division and is the official record of emission allowances transactions and account balances.

As mentioned earlier, an important feature of the U.S. Acid Rain Program's emissions trading system is the availability of complete, transparent information on the allowances being traded. The ability for all market participants, and, indeed, the general public, to track the movement of allowances is vital to the program's success. At the center of this effort is the ATS, which is a database that holds the official record of all allowances as they change hands and, eventually, are retired or removed from the system.

The ATS assigns a unique serial number to each allowance. It is possible to track an individual allowance throughout its life from initial allocation, through each trade, all the way to retirement. The serial number consists of 12 numbers, the first four of which indicate the first year the allowance can be used for compliance purposes _ in other words its vintage year. For instance, allowance 2000-01234567 is a vintage year 2000 allowance and cannot be included by a utility in its year-end compliance report until the year 2000. Allowances not used in their vintage year can be banked or saved for use in future years.