Can China’s vehicular emissions regulation reduce air pollution?—a quasi-natural experiment based on the latest National Vehicular Emissions Standard (stage-VI)

The existing evidence on the environmental effects of vehicular emissions regulation almost comes from developed countries, but the effectiveness of this policy tool in developing countries, especially in China, remains unclear. This study, for the first time, examined the mitigating effects of China’s vehicular emissions regulation on air pollution at the prefecture level cities, by using the latest implementation of China’s National Vehicular Emissions Standard VI (CHINA-VI) as a quasi-natural experimental process of policy shocks. To this end, monthly data from 2018 to 2020 was applied to construct a difference-in-differences (DID) model. The results showed that pilot cities’ air quality index (AQI) significantly decreased by 4.74 compared to non-pilot cities after the implementation of CHINA-VI. Also, the concentration of PM(2.5), PM(10), and O(3) has decreased by 3.6 μg∕m(3), 6.4 μg∕m(3), and 3.0 μg∕m(3), respectively, which means the new China’s vehicular emissions regulation has comprehensively improved air quality. The findings are still valid after a series of robustness tests using different estimation methods such as PSM-DID and IV-2SLS. In addition, we also found heterogeneity in the environmental performance of CHINA-VI across cities. Specifically, cities with lower levels of green finance development and public environmental concern showed a greater emissions reduction effect, but smart cities showed a greater emissions reduction effect than non-smart cities.