Clean heating and clean air: Evidence from the coal-to-gas program in China

Abstract

Environmental degradation, especially air pollution, has been a prevalent problem in China in recent decades. Rather than focus on traditional regulatory policies aimed at enterprises engaged in production activities, this paper studies the effects of the clean heating policy targeting residents in China. Taking the coal-to-gas program as a quasi-natural experiment and using a city-level dataset of daily air quality, we study the effects of the clean heating policy implemented in Beijing and its surrounding areas on air quality with the difference-in-differences method. The results show that the clean heating policy significantly reduced air pollution in coal-to-gas cities, bringing improved economic welfare, with stronger effects in Beijing's neighboring cities. We find no evidence suggesting a decreasing policy effect over time. In addition, we find that increasing subsidies can further enhance the policy's effectiveness. We also test the spatial spillover effects of this policy and calculate its geographical boundary. Changing the energy structure in conjunction with regulating residential emissions is crucial to improving air quality.