Environmental and economic impacts of transitioning to cleaner heating in Northern China

•Residential coal-fired heating has led to significant air pollution in northern China.•We examined pollutant reductions of the coal to natural gas or electricity policy.•The cleaner heating policy can alleviate concentrations of five air pollutants.•The total cost of cleaner heating transition is estimated to be 3,337 million USD. Cleaner heating plays a significant role in reducing air pollution. Studies show that residential coal-fired heating in some countries has led to considerable air pollution. In China, coal consumption and air pollutants increase dramatically especially during the winter heating period when centralized systems provide heating for select cities. Using a Difference-In-Differences (DID), we examined the daily reduction effect of the Coal to Natural Gas or Electricity (CNGE) policy on air pollution in the Beijing-Tianjin-Hebei and surrounding (“2+26”) region that receives centralized heating. The net treatment effect from the CNGE policy is estimated to alleviate 3.4 μg/m3 of PM2.5, 5.3 μg/m3 of PM10, 4.3 μg/m3 of SO2, 14.1 μg/m3 of O3 and 0.1 mg/m3 of CO. Moreover, we estimated the total cost of the transition to natural gas or electricity to be 3,336.78 million USD in 2017. These results can provide references for policymakers to encourage using and/or prolonging the CNGE policy in China and other countries that wish to make the transition away from coal.