Evaluating the air quality impacts of nitrogen oxide emission trading

Emission cap and trade programs are viewed as innovative and economically efficient mechanisms for reducing ozone precursor emissions and are beginning to see widespread use. However, few studies have examined the air quality impacts of trading emissions of nitrogen oxides (NO_x). Emission trading is expected to change the spatial distribution of NO_x emissions, and changes in the spatial distribution of NO_x emissions can have a significant impact on ozone formation since ozone formation is a strong, non-linear function of the local concentrations of volatile organic compounds (VOC) and NO_x, (i.e., a ton of NO_x emitted at one time and location may not have the same ozone productivity as a ton of NO _x emitted at a different time and location). The research described in this thesis develops and applies a computational framework to evaluate the potential air quality benefits of NO_x emission trading compared to the air quality benefits of across the board NO_x reductions for point sources in Eastern Texas. The comparison was performed by first determining, using the Comprehensive Air Quality Model with extensions (CAMx), the changes in ozone concentrations associated with NO_x reductions at more than 50 individual facilities in Eastern Texas. These facility specific changes in ozone concentrations due to NO_x reductions were then converted into a variety of indices that quantify ozone reduction benefits. Trading scenarios were then evaluated through Monte Carlo simulations. The results indicate that approximately 20% of all trading scenarios deviate by 25% or more from the ozone reduction benefits achieved by across the board reductions. This result was independent of the index used to evaluate ozone reduction benefit. This variability in the benefits associated with trading scenarios was comparable to the variability in benefits associated with changes in meteorological conditions over the days that were modeled. Additional Monte Carlo simulations indicated that the average benefit associated with NO _x trading could be improved and the variability in benefit reduced by creating a trading program where a small group of high impact facilities are allowed to sell, but may not buy, NO_x allowances.