Does coal-to-gas policy reduce air pollution? Evidence from a quasi-natural experiment in China

Whether the use of cleaner energy can reduce air pollution is the focus of debate among scholars, but there is still no unanimous conclusion. This study seeks to explore the net impact of coal-to-gas policy, an energy transition policy in China, on air pollution. Utilizing prefecture-level city data from 2003 to 2016, we apply the PSM-DID method to estimate the policy's net impact. Further, we examine the dynamic effects of coal-to-gas policy and its impact mechanism on air pollution. The results show that 1) The coal-to-gas policy has an average reduction effect of 31.3%, 36%, 0.3%, and 33.1% on industrial sulfur dioxide (SO2), industrial Smoke (dust), fine particulate matter (PM2.5), and air quality index (AQI). After eliminating the spreading interference of PM2.5 in surrounding areas, the effect of this policy on PM2.5 reduction is 7%; 2) the impact of the coal-to-gas policy is significant in 2012 and 2013, i.e. the second and third years after the implementation of the policy. Then, the reduction effect of the policy on air pollution began to decrease; 3) the coal-to-gas policy has led to the increase in the proportion of the tertiary industry and the decrease in the degree of industrialization. Since the development of the tertiary industry and the reduction of industrialization also led to a reduction in air pollution, the coal-to-gas policy can reduce air pollution through industrial structure upgrading and de-industrialization. The robustness test results support the above conclusions. Practicable policies to reduce air pollution in China are suggested and applicable to other developing countries with resource-scarce and serve air pollution.