Clean heating and air pollution: Evidence from Northern China

Abstract

In response to the severe air pollution caused by winter heating, the Chinese government has proposed a clean heating policy since 2017. This paper first uses air quality monitoring and household micro-survey data in northern cities to investigate the impact of this policy on air pollution through the DID approach. The empirical results show that the air quality index of the pilot cities has decreased by 12.3 units, which means that the clean heating policy has significantly reduced air pollution. The finding still holds through a series of robustness analyses such as controlling for confounding policies and Goodman-Bacon decomposition. Besides, we explore the mechanism at the urban and household levels. It shows that this policy has significantly increased the consumption of natural gas and the number of natural gas users in urban central heating and also prompted more households to use natural gas and electricity instead of solar energy to replace coal for heating. The heterogeneity analysis shows that this policy has a greater impact on both low-urbanization cities and developed cities. Furthermore, we analyze price sensitivity and the costs and benefits of the policy, and find that the increase in natural gas prices significantly inhibits the policy effect, while the price of coal has no significant effect. In addition, the policy significantly reduces the incidence of lung disease among middle-aged and elderly people and leads to a significant increase in household heating costs in winter, which indicates that the clean heating policy has generated environmental and health benefits despite increasing government and household expenditures.