Clean heating and heating poverty: A perspective based on cost-benefit analysis

To improve the air quality in winter, clean heating policy was implemented in "2 + 26" cities of China in 2016, which mainly included replacing coal with gas or electricity. Tremendous financial subsidies have been provided by city and central governments. This new heating mode changed the heating fee-cost to residents. This paper estimates the economic costs to both governments and residents, and evaluates the environmental and public health benefits by combining a difference-in-differences model with an exposure-response function. Results show that the total costs of clean heating were up to 43.1 billion yuan. Governments and residents account for 44% and 56% of the total costs, respectively. In terms of benefits, the clean heating project is effective for air pollution control and brings health economic benefits of about 109.85 billion yuan (95% CI: 22.40-159.83). The clean heating policy was identified as a net-positive benefit program with environmental and public health improvements. However, the inequality in subsidies from different cities governments increases the heating burden on low-income households and leads to heating poverty for households in the less developed regions. We provide suggestions for implementation in future clean heating campaigns and in subsidy mechanism design in China and for other developing countries.