Evaluating the impact of denitrification tariff on energy-related NOx generation in China: Policy effects and regional disparities

Previous studies analyzing energy related nitrous oxides (NOx) focus on the calculation and influencing factors of NOx generation, but lack sufficient analysis of policy impacts. This paper attempts to evaluate a critical financial incentive for motivating NOx removal in China – the denitrification tariff for power plants. We calculate energy-related NOx generation in 30 provinces from 1995 to 2016, and test the impact of the denitrification tariff using an extended STIRPAT (Stochastic Impacts by Regression on Population, Affluence, and Technology) model. We examine policy impacts in the pilot and follower regions with different implementation time, and find significant reduction in NOx generation in both regions. On national average, our model estimates that 1% increase in the denitrification tariff leads to 0.190% decline in energy-related NOx generation, holding other variables constant. The effect size of the tariff is higher in the follower region than in the pilot region, whereas policy effect is lagged for 2 years in the pilot region. We also find socio-economic factors significantly positively correlated with NOx generation. The result suggests that tailored incentives considering regional disparities will work better than a uniform incentive, and a combination of policy instruments in reducing fossil fuel consumption is desired to effectively reduce NOx generation. •Energy-related NOx generation has noticeable decline around 2013 in China's 30 provinces.•We estimate the impacts of the denitrification tariff using an extended STIRPAT model.•We find 1% increase in denitrification tariff leads to 0.190% decline in energy-related NOx generation.•Policy effects lag 1–2 years in the pilot region.•The tariff is more effective in the follower region.