A Temporal NOx Emissions Trading System: Case Study of US Power Plants
Despite the significant NOx reduction in the past decade, ozone concentrations in the eastern US are in violation of the National Ambient Air Quality Standard (NAAQS). This is because the location- and time-specific effects of NOx emissions on ozone formation have not been taken into consideration under cap-and-trade programs where polluters trade their emission quotas on a one-to-one basis. To account for such effects, a cap-and-trade program can be reformed by inclusion of exchange rates set by the regulator on an hourly basis. We examine the performance of such a reformed cap-and-trade program using a case study of US power plants. Our results indicate that shifting emissions from high-damage hours to low-damage hours can significantly improve the performance of the system.
KeywordsExchange Rate Ozone Concentration Abatement Cost Emission Trading Emission Trading System