Impacts of electricity generation on air pollution: evidence from data on air quality index and six criteria pollutants

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We estimate impacts of electricity generation (total power output and thermal power output) on air pollution (air quality index (AQI) and six criteria air pollutants), with a particular emphasis on industry and city heterogeneity. To identify this relationship, we combine detailed monthly data on electricity production, air pollution, economy and weather for a six-year period in four biggest cities in China. Our fundamental identification strategy employs Ordinary Least Squares Regression of panel data with city–month fixed effects and addresses confounding variations between electricity generation and economy or weather conditions. We find that one unit (100 million kwh) increase in power output is associated with a 0.3-unit (representing value) increase in AQI, nearly all of which is driven by increases in thermal power output. We notice a robust positive impact of increased electricity generation (specifically thermal power output) on PM2.5 and PM10, also positive relationships between increases in other power output (total power output minus thermal power output) and SO2, NO2, while changes in power output have no statistically significant effect on CO and O3. The heterogeneous pollution effects of electricity generation are present in specific cities with different weather conditions. The results indicate that a reduction policy in power industry differentiating among cities might enhance effectiveness by considering each city’s particular backgrounds, a previously overlooked aspect associated with pollution reduction policies.