Air Pollution Control: An Analysis of China’s Industrial Off-Peak Production Policy through the Quasi-Natural Experiment Method

To reduce frequent heavy air pollution, the Chinese government suspends clinker production during the heating season in most areas of the North, which is known as the Clinker Off-peak Production Policy. The questions regarding such a repressive production policy for environmental purposes are whether this policy is effective in reducing pollutants and whether the marginal cost is high. To explore these policy effects, a quasi-experiment is designed, taking advantage of spatial-temporal variations in policy implementation. With the triple-difference method and environmental satellite data, the effect on air pollution is estimated to be −1900 μg/m2 (~2%) of SO2 and −3200 μg/m2 (~10%) of NO2. With daily price information and the difference-in-differences method, the market effect is estimated to be an approximately 10% increase in annual sale prices. The marginal cost estimated through a back-of-the-envelope analysis is 32 k RMB yuan/ton SO2 or NO2, which is 24.88 times the pollutant discharge fee but which better reflects the pollutant shadow price.