The U.S. House of Representatives passed the American Clean Energy and Security (ACES) Act on June 26, 2009 by a vote of 219-212. The ACES Act includes a cap-and-trade program designed to limit emissions of greenhouse gases in the United States. This policy memo presents an overview of how emission allowances are distributed—the extent to which they are auctioned or freely allocated and the policy objectives achieved by their distribution.