Can Environmental Protection Tax Decrease Urban Ozone Pollution? A Quasi-Natural Experiment Based on Cities in China

Wenhao Xue, Zhenwu Xiong, Liyun Wang, Zhe Yang () and Xinyao Li
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Wenhao Xue: School of Economics, Qingdao University, Qingdao 266071, China
Zhenwu Xiong: School of Economics, Qingdao University, Qingdao 266071, China
Liyun Wang: School of Economics, Qingdao University, Qingdao 266071, China
Zhe Yang: School of Economics, Qingdao University, Qingdao 266071, China
Xinyao Li: Institute of Marine Development, Ocean University of China, Qingdao 266100, China

Sustainability, 2024, vol. 16, issue 11, 1-17

Abstract: The air pollution control in China has gradually transitioned from single pollutant control to multi-pollutant collaborative governance. Among the relevant factors, the control of ozone (O 3 ) pollution has received widespread attention. Among the numerous air pollution regulations, environmental protection tax (EPT) is highly valued, as it can effectively control the emissions of O 3 precursors. The objective of this study is to investigate whether the implementation of an EPT can reduce urban O 3 pollution in China. Based on this, we used the difference-in-differences (DID) method, combined with the panel data from 221 cities in China from 2015 to 2020, to conduct an empirical analysis of the impacts of EPT reform policy on O 3 pollution. The econometrics results indicate that the EPT reform policy can effectively inhibit urban near-surface O 3 pollution by approximately 2.1%, and this result was confirmed to be accurate by multiple robustness tests. Additionally, significant spatial heterogeneities of this control effect are captured in this paper. Due to urban development levels and geographical factors, the better pollution reduction effects were national-model environmental protection, and efforts based on inland cities and high-level financial cities. Furthermore, three potential mechanisms, including cutting energy consumption, industrial structure optimization, and technological advance, were verified as being relevant to the impact path of EPT reform policy as to O 3 pollution. This paper can provide empirical evidence for O 3 pollution control in China, and also contribute to the further improvement of environmental protection policies.

Keywords: environmental protection tax; ozone; difference-in-differences; energy consumption; technological advances (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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