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With a growing focus on energy and environment, there is need to include emission constraints in electricity markets. Current methods to reduce emissions include the Acid Rain Program, NOx Trading Programs and Cross-State Air Pollution Rule (CSAPR). Even with these cap-and-trade programs in effect, there are substantial Nonattainment Areas in the USA with respect to the National Ambient Air Quality Standards. In this paper, we present a novel approach to reduce emissions by coupling the US Environmental Protection Agency (EPA) atmospheric model CMAQ, and an electricity market model. We include weather, chemistry, time and locational aspects of NOx and SOx emissions to reduce specific pollutants which cap-andtrade programs do not implement. We introduce a linear emission constraint within our electricity model which implicitly involves the atmospheric effects. We present an example to successfully reduce a sulfate particulate matter (ASO4) concentration at a specific location and at a specific time period.

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