The Houston/Galveston Area Mass Emission Cap & Trade program was implemented in December 2000 by the Texas Natural Resources Conservation Commission (TNRCC). The program began on January 1st 2002, and established a final cap in 2007. Allowances are issued to all stationary sources located within the eight county region at sites with a design capacity 10 or more tons of NOx emissions per year. The eight county region is composed of Harris, Galveston, Brazonia, Liberty, Montgomery, Fort Bend, Walter, and Chambers counties. Allowances are issued on January 1st of each year, and cover through December 31st. Allowances are freely traded, but can also be banked if unused. An allowance that is banked can only be used the year following the allocation year, however a control measure dictates that current-vintage allowances must be used before banked allowances can be submitted, ensuring that actual emissions are close to the set cap for the year, and affected sources do not exceed projected emissions by large margins.

The TNRCC has awarded facilities that employ emission reduction programs with Discreet Emission Reduction Credits (DERCs). Discreet Emissions Reduction Credits generated in the Houston/Galveston Area through emission reduction can be used as NOx emissions allowances under the current program with certain limitations. Mobile Discreet Emission Reduction Credits (MDERCs) can be used freely as a regular emission allowance without limitations.

NOx emissions allowances may be used as offsets for New Source Review (NSR) purposes. Offsets must still be surrendered for the “ratio” portion of the NSR.