Towards cost-effective total pollution control in Chinese industries

The cost-effectiveness of the command-and-control policy instrument in environmental regulations has been debated for a long time. The aims of this study were to quantify the magnitude of the decline in the cost-effectiveness of the Regional Total Pollution Control (RTPC) policy, which includes mandatory emission reduction goals for each province, and to determine factors affecting it. For this purpose, province-level and technology-specific marginal abatement cost curves were constructed for China's three key industries, that is, thermal power, iron and steel, and cement industries. The results show that the average decline in the cost-effectiveness in these industries based on the implementation of the RTPC policy during the 13th Five Year Plan is similar to 2.55%. The magnitude of the decline slightly changes from 1.44% to 3.63% (90th percentile) when different emission reduction allocation strategies are selected for different provinces. The three main factors contributing to the decline in the cost-effectiveness are the strictness of the emission reduction goal, variance of unit abatement cost (UAC) of technology, and matching degree between the UAC and emission reduction goals based on the RTPC. The RTPC causes a relatively slight decline in the cost-effectiveness compared with the competitive market and therefore can be used for future policy design.

Automated summary

The cost-effectiveness of the RTPC policy in China's key industries has been analyzed in this study. The results show that the average decline in cost-effectiveness is about 2.55%. The strictness of emission reduction goals, variance of unit abatement cost, and matching degree between cost and goals are the main factors affecting the decline in cost-effectiveness.