The U.S. House of Representatives passed the American Clean Energy and Security (ACES) Act, sponsored by Representatives Waxman and Markey, on June 26, 2009. The ACES Act includes a market-based regulatory program—cap and trade—to limit greenhouse gas (GHG) emissions. Specified sources emitting GHGs must hold allowances (permits) in order to continue emitting these gases.  Although cap and trade is generally considered a more cost-effective approach than traditional regulation, some are concerned about high compliance costs for regulated firms and related high energy prices for consumers in the early years of the program. In addition, concerns have been raised about the possibility of significant volatility in the price of emission allowances. This memo outlines some of the policy options that can address these cost concerns and provides an overview of the measures included in the ACES Act.