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Improving NO(x) cap-and-trade system with adjoint-based emission exchange rates
S Morteza Mesbah1, Amir Hakami, Stephan Schott
1Department of Civil and Environmental Engineering, Carleton University, 1125 Colonel By Drive, Ottawa, Ontario, Canada.
Cap-and-trade programs for nitrogen oxides (NOx) can be improved. Incorporating location-specific emission exchange rates enhances environmental performance with minimal cost increases.
Area of Science:
- Environmental Science
- Environmental Economics
- Atmospheric Chemistry
Background:
- Cap-and-trade programs are cost-effective environmental policy tools.
- Nitrogen oxides (NOx) are ozone precursors and nonuniformly mixed pollutants.
- Current NOx cap-and-trade systems may neglect location-specific environmental impacts.
Purpose of the Study:
- To evaluate the effectiveness of a modified NOx cap-and-trade system using sensitivity-based exchange rates.
- To compare the environmental performance and cost of the current system versus a proposed system.
- To analyze NOx emissions trading behavior and post-trade ozone concentrations.
Main Methods:
- Adjoint sensitivity analysis to calculate location-specific exchange rates.
- Constrained optimization for predicting trading behavior and environmental outcomes.
- Case study analysis of 218 coal-fired power plants in the 2007 NOx Budget Trading Program.
Main Results:
- The proposed NOx trading policy with sensitivity-based exchange rates improves environmental performance.
- System-wide abatement costs increase negligibly with the proposed policy.
- Exposure-based exchange rates yield superior environmental outcomes compared to concentration-based rates.
Conclusions:
- Including emission exchange rates in NOx cap-and-trade programs enhances environmental effectiveness.
- The proposed policy offers a more optimal approach to managing NOx emissions and ozone formation.
- Policy design should consider pollutant characteristics and location-specific impacts for improved environmental outcomes.
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