A conceptual model has been developed to examine the compliance costs under
an intra-plant emission trading system for a non-uniformly mixed assimilative
pollutant. The model incorporates the number of emission sources, the concentration of
pollutants emitted at each source, the marginal cost of abatement for each source, the
transfer coefficient that relates emission at each source with the impact on ambient air
quality, and the desired ambient air quality target. The model is applied to an integrated
steel plant in India. Results of this study demonstrate that the emission trading is more
cost effective than the existing regulatory system. Further, intra-plant trades would
result in 4.7 per cent saving to the plant while securing an improvement in ambient air
quality in the studied geographical area. These point towards the need to implement
intra-plant trading in identified integrated steel plant in India.
iii
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