Optimal Ozone Control with Inclusion of Spatiotemporal Marginal Damages and Electricity Demand

Marginal damage (MD), or damage per ton of emission, is a policy metric used for effective pollution control and reducing the corresponding adverse health impacts. However, for a pollutant such as NOx, the MD varies by the time and location of the emissions, a complication that is not adequately accounted for in the currently implemented economic instruments. Policies accounting for MD information would aim to encourage emitters with large MDs to reduce their emissions. An optimization framework is implemented to account for NOx spatiotemporal MDs calculated through adjoint sensitivity analysis and to simulate power plants' behavior under emission and simplified electricity constraints. The results from a case study of U.S. power plants indicate that time-specific MDs are high around noon and low in the evening. Furthermore, an emissions reduction of about 40% and a net benefit of about $1200 million can be gained for this subset of power plants if a larger fraction of the electricity demand is supplied by power plants at low-damage times and in low-damage locations. The results also indicate that the consideration of temporal effects in NOx control policies results in a comparable net benefit to the consideration of spatial or spatiotemporal effects, thus providing a promising option for policy development.