Technology Choice for Reducing NOx Emissions:
An Empirical Study of Chinese Power Plants
Teng Ma
Kenji Takeuchi

November 2016
Discussion Paper No.1644

GRADUATE SCHOOL OF ECONOMICS
KOBE UNIVERSITYROKKO, KOBE, JAPANTechnology Choice for Reducing NOx Emissions:
An Empirical Study of Chinese Power Plants
Teng Ma and Kenji Takeuchi∗
Graduate School of Economics, Kobe University
Rokko, Kobe, 657-8501 Japan

November 25, 2016

Abstract
This study investigates the choices of denitration technology in the Chinese thermal
power sector. Using a multinominal logit model of the choices among 1,135 boilers inthermal power plants operating in China in 2013, we analyze how the choices were
influenced by government policies, the stringency of national standards, and subsidies
for using specific technology. The results are as follows. First, China’s 12th Fiveyear Plan might make it more attractive for plants to choose the cheapest denitration
technology among the three options examined in this study. Second, technology choices
diﬀered significantly by region before the 12th Five-year Plan period. These diﬀerences
have disappeared, perhaps due to the economic development across all regions of China.
Third, electricity price subsidies oﬀered to plants that use denitration equipment might
aﬀect their technology choice. These results suggests that plants might choose thecheapest technology available, in order to lower investment costs.

Keywords: technology choice; NOx emissions; China; thermal power sector
JEL Classification Numbers: O33, Q53, Q55∗

E-mail: mt yx@hotmail.com (Ma), takeuchi@econ.kobe-u.ac.jp (Takeuchi).

11Introduction
A large proportion of air pollution in China stems from coal combustion: coal was thesource of 90% of all sulfur dioxide (SO2 ) emissions and 67% of nitrogen oxides (NOx ) emissions in 2005 (Liang et al., 2011). Although total SO2 emissions from the industrial sector
decreased from 22.37 million tons in 2006 to 18.35 million tons in 2013, total NOx emissions
increased from 11.36 million tons to 15.45 million tons during the same period (China State
Statistical Bureau, 2007, 2014). NOx emissions contribute to the formation of fine particles(PM10/PM2.5) that inflict significant damage to the health of Chinese citizens (Chen et al.,2015).
The regulation of NOx emissions in China has lagged behind that of SO2 emissions.
Between 2005 and 2010, the share of thermal power plants that installed desulfurizationequipment increased from 14% to 86%. As a result, total SO2 emissions decreased 14.29%
during the same period. In contrast, the Chinese government shifted its focus to the regulation of NOx , starting with the 12th Five-year Plan initiated in 2011. This plan announced,
for the first time, a concrete target for reducing nitrogen oxide emissions: a 10% reductionin NOx emissions from the 2010 levels by 2015 (State Council of the People’s Republic ofChina, 2011a).
Several policies were implemented to control NOx emissions during the 12th Five-year
Plan (2011–2015). The 12th Five-year Plan on Environmental Protection insists that all
newly built power generation units and existing units whose capacities exceed 300 MW be
coupled with denitration equipment (State Council of the People’s Republic of China, 2011a).
The new NOx emission standards were released in July 2011 and took eﬀect in January 2012.
Furthermore, the government issued the 12th Five-year Plan for the Prevention and Controlof Air Pollution in Key Regions (Key Regions Plan) in October 2012 (Chinese Ministryof Environmental Protection, 2012). It sets higher emissions reduction targets in specificregions designated according to the type and level of air pollutants experienced there. The
government also oﬀered subsidies to thermal power plants that used denitration equipment.
2

As a result, the use of technology for controlling NOx began to proliferate. As of 2013, 1,238
pieces of denitration equipment had been installed on 7,515 boilers in 3,102 power plants in
China.1 By 2013, NOx emissions from the thermal power sector had decreased 1.2 million
tons (or by 11%) from the 2012 volume (Chinese Ministry of Environmental Protection,
2014a).
Several engineering studies have investigated the role of technological options for controlling NOx emissions in the thermal power sector in China. Xiong et al. (2016) investigatedthe emission inventory of coal-fired power plants in Shandong and projected future emissions under three scenarios. Under the assumption that the penetration of selective catalytic
reduction (SCR) and selective non-catalytic reduction (SNCR) technology would increase
from 10% and 2% in 2012 to 95% and 5% in 2030, respectively, they predict that NOx
emissions will decrease by 80.63% relative to the 2012 baseline. Zhao et al. (2008) evaluate the cost-eﬀectiveness of various coal-power technologies and estimate the diﬀerences
in capital costs and overall cost of electricity. The net plant eﬃciency for the integrated
gasification combined cycle (IGCC) technology is 45%, and NOx emissions are minimized byusing IGCC among all the technological options. However, the cost per unit of electricity
generated while using IGCC is 30% to 40% higher than the option using SNCR technology,
even when charges related to pollutant emissions are included. While these studies suggestthat the technology adoption will play a key role in reducing NOx emissions in China, details
on the actual adoption process and its driving force have not been analyzed.
On the other hand, economic studies of the technology choices for controlling NOx
have focused on cases in developed countries. For example, Popp (2010) investigates links
between knowledge stock and the adoption of NOx control technology in US coal-fired
power plants. His results suggest that an increased level of knowledge stock—measured
by patent count—increases the adoption rates of combustion modification techniques and
1

The number is the total of utility power plants and non-utility power plants. The latter consists of power
plants managed by industrial sectors for their own energy consumption. There were 1,853 utility power plants
and 1,249 non-utility power plants in China in 2013. They have 4,825 and 2,690 boilers, respectively. Amongthem, 1,076 utility boilers and 162 non-utility boilers had installed denitration equipment in 2013.

3

post-combustion treatments. Examining the impact of Swedish emission regulations, Sternerand Turnheim (2009) considered the process of technological change in relation to NOx abatement from large stationary sources. They regressed the plant emission intensities of NOx on
various explanatory variables, including specific technological options. Their results suggestthat the most significant and sizeable reduction was attained by using SCR, followed by thatattained using SNCR. Bonilla et al. (2015) studied how the use of various NOx abatement
technologies has diﬀused under the Swedish system of refunded emission payments by analyzing the determinants of the time to adoption. Their results revealed an economy of scale:the greater the capacity of the boiler, the more likely it is that post-combustion technologies
will be adopted. Their results also suggest that stringent standards increase the regulatory
costs of NOx emissions and motivate firms to invest in more than one NOx -reducing technology. They attribute no explanatory power to the predicted decrease in net charge liabilities
or to most of the other covariates across the subsamples in Sweden.
This study focuses on the choices of NOx control technology in the thermal power sector
in China, where air pollution is a major issue under conditions of rapid economic growth.
We analyze how technological choices have been influenced by government policies, thestringency of national standards, and subsidies for using specific technologies. We focus
on the available post-combustion technologies, as the removal eﬃciency of NOx throughpost-combustion technology is higher than that through the pre-combustion or combustion
process. We find that SNCR adoption increased after 2010 and identify a clear distinction
in regional distribution between the pre- and post- 2010 periods concerning the adoptionof SCR technology. We also investigate how subsidies for operating denitration equipmentaﬀected SCR adoption and find that subsidies somewhat discouraged it, perhaps because
SCR is more expensive than the other technological options.
In Section 2, we provide background information and develop our hypothesis. We also
introduce the denitration technology, national standards, and various policies relevant to theNOx emitted by thermal power sector in China. Section 3 explains the study’s empirical4

strategy and data. Section 4 presents the study’s empirical results, and Section 5 concludes
the paper.

2

Background, and Hypothesis Development

2.1

Technological Options for Post-combustion Control

The abatement of NOx emissions occurs by way of three diﬀerent processes: precombustion control, combustion modification, and post-combustion capture (Skalska et al.,2010; Cheng and Bi, 2014). Pre-combustion control involves fuel purification, used to reduce
the nitrogen content of the fuel. Combustion modification refers to technology improvementsin the boiler design, which can reduce NOx formation during the combustion processes. Postcombustion technologies are end-of-pipe solutions that reduce NOx in the flue gases following
the combustion stage. Post-combustion technologies can remove up to 90% of NOx (Guoet al., 2012), while that of pre-combustion control and combustion modification control can
reduce NOx by only less than 50% (Radojevic, 1998). Therefore, the adoption of postcombustion technology is important for making any significant reductions in NOx emissions.
The SCR and SNCR technology are representative post-combustion processes. SCR
technology is usually applied to thermal power plants with capacities greater than 200 MW
and that work at a temperature in the range of 300 to 400 ◦ C (Cofala and Syri, 1998). Whilethe denitration eﬃciency of SCR is high (i.e., up to 80−90%), one problem is that catalyst
pollutes the environment (Zhou et al., 2012). The ammonia used in the catalytic process
can corrode the equipment, produce ash pollution, and damage the environment. SNCR is
another technology used to control NOx emissions from coal-fired power plants. Since it does
not require any catalyst, the denitration process produces no pollution. It incurs a lower
investment cost and can be applied to any size of unit. On the other hand, it requires ahigh working temperature (i.e., 870−1100 ◦ C), and its rate of denitration eﬃciency is usually
lower than 40% (Liang et al., 2011).
5

Table 1 summarizes the characteristics of these two technologies. SCR requires catalyst,
while SNCR does not, and there is a pressure loss with SCR but not with SNCR. The removal
eﬃciency of SCR is as high as 80%, while that of SNCR is 40% at most. The construction
cost of SCR is higher than that of SNCR. SCR produces ammonium hydrogen sulfate, while
SNCR does not (Zhou et al., 2012). In addition to the SCR and SNCR technologies, a hybridof these two technologies, SNCR−SCR, is used in Chinese thermal power plants (Liang etal., 2011). It is more environmentally friendly and cost-eﬀective than SCR and is more
denitration-eﬃcient than SNCR. SCR and SNCR technologies were initially installed in theearly 2000s, while the first SNCR−SCR technology was installed in 2006 (Chinese Ministryof Environmental Protection, 2014b). As we will see in a later section, a large proportion ofthese technologies were installed after 2010.
[Table 1]

2.2

National Emission Standards

Table 2 summarizes the national standards for NOx control in China. National emissions
standards for NOx from thermal power plants were introduced and updated in 1997, 2003,
and 2012. These are included in direct regulations of various air pollutants from the power
generation sector, named GB13223-1996, GB13223-2003, and GB13223-2011. These GBs
are implemented on the basis of the Air Pollution Prevention and Control Law.
[Table 2]
GB13223-1996 included the first national standard for controlling NOx emissions fromthe thermal power sector. It requires that eﬄuent concentrations be less than 650 mg/m3 .
The regulation applies only to boilers with a maximum continuous rating greater than 1,000
t/h and that began operating after January 1997. GB13223-1996 was updated to GB132232003 in 2003; the emissions standard in this GB varied according to the year in which theplant was built. The first category contains plants that started operations before the end of6

1996; the second category includes plants that started operations between January 1997 andDecember 2003; and the third category includes plants that started operations after January
2004. For plants in the first category, the most stringent standard was 1,100 mg/m3 . For
the second and third categories, the values were 650 mg/m3 and 450 mg/m3 , respectively.
More stringent standards were applied to newer plants. Subsequently, GB13223-2011 wasintroduced in 2012. The most stringent standard is 450 mg/m3 and applies to plants thatwere in operation until 2012; it is 100 mg/m3 for those that started operations after 2012.
It is reasonable to expect that more stringent standards would encourage firms to employ
denitration technology that features higher removal eﬃciency. On the other hand, firms
might not control their emissions, even under tighter standards, due to insuﬃcient monitoringand enforcement. In such a case, regulation via stringent standards might not be eﬀective
in inducing firms to invest in better emissions control equipment.

2.3

Policy Instruments under Five-year Plans

The Chinese government mentioned NOx control as a policy agenda for the first timein the 11th Five-year Plan (2006–2010). The government announced that it would control
the growth trend of NOx emissions and reduce the power sector’s NOx emissions intensity
by 2010. The government also announced that it would control the total NOx discharge by
2020. However, the plan did not specify any concrete target during that period (Chinese
Ministry of Environmental Protection, 2012).
The subsequent 12th Five-year Plan (2011–2015) introduced a concrete target for NOx
emissions for the first time in the history of Chinese environmental policy. Based on the
12th Five-year Plan on Environmental Protection in December 2011, it announced a 10%
reduction in NOx emissions by 2015 from 2010 levels (State Council of the People’s Republicof China, 2011a). The emissions target for each province in China was also announced(State Council of the People’s Republic of China, 2011b). The targets exceed 15% in theeastern regions such as the Yangtze River Delta area, the Beijing–Tianjing–Tangshan area,7and the Pearl River Delta area (see Table 3), and are approximately 10% in the inland areas.
Areas such as Hainan and Qinghai were allowed to increase their emissions, suggesting that
diﬀerences in economic development levels were considered when these targets were set (Xing,2012).
In October 2012, the 12th Five-year Plan for the Prevention and Control of Air Pollution
in Key Regions (Key Regions Plan) was issued to promote the enforcement of air pollution
control in specific regions. The 2015 reduction target for NOx emissions in key regions was
13%, and that for the NOx concentration was 7%, both from 2010 levels. Furthermore, theKey Regions Plan defines Key Control Areas with regards to diﬀerent types of air pollution,
where even stricter pollution control measures were implemented. Concerning NOx control,
44 cities in the central region of Liaoning, around of Wuhan, Changsha–Zhuzhou–Xiangtan,
Chengdu–Chongqing, and the urban area of Western Taiwan Straits were designated as Key
Control Areas (Chinese Ministry of Environmental Protection, 2012). We can expect thatthe reduction target of each province and the designation of the Key Control Areas impacted
firms’ choices of NOx control technology during this period.
[Table 3]
Regarding the means of controlling NOx emissions, the 12th Five-year Plan insists that
all newly built power generation units and large existing units (≥ 300 MW) be equippedwith flue gas denitrification equipment (Zhao et al., 2013). The Key Regions Plan announced that thermal power generating units larger than 200 MW that had been operating
for fewer than 20 years should have denitration equipment installed, and it required that theremoval eﬃciency of that equipment be greater than 85%. Moreover, the government would
strengthen its monitoring of installed equipment to ensure its stable operation. To oﬀer an
incentive for operating control equipment, in November 2011, the Chinese National Development and Reform Commission introduced a subsidy via higher on-grid electricity prices
for coal-fired power plants that were using NOx emissions control equipment. The policy
was first implemented in 14 pilot provinces selected from China’s 31. The subsidy level was
80.008 RMB/kWh in addition to the baseline electricity price. In the first half of 2012, NOxemissions declined by 0.24% from the previous year. Denitration eﬃciency was 40.3%, a
16.1% increase over the previous year. In January 2013, the application for a subsidy was
extended nationwide, although the subsidy level remained unchanged from the 2011 level(Chinese National Development and Reform Commission, 2013). These policy instruments
might influence the adoption of particular technologies, as plants might choose cheaper andless-eﬀective technologies if monitoring and enforcement instruments are not strong.

3

Empirical Strategy and Data

3.1

Empirical Model

We focus on the choices of technologies used to control NOx within China’s thermal power
sector. We assume that these choices are aﬀected by the policies, subsidies, and economic
characteristics of each region. We also assume that there are three options (j = 1, 2, 3) for
control technology (i.e., SCR = 1, SNCR = 2, SNCR−SCR = 3). The expected profit thatthe ith boiler (i =1,...,n) derives from the jth option can be expressed as Vij . The expected
profit function is written as:

Vij = βj1 Pi + βj2 Si + βj3 Oi + βj4 Ei + ϵij = Zij + ϵij ,(1)where P represents the policies applied when the boiler is transformed, S represents thestandards applied to the emissions from the thermal power plant, O denotes boiler-specificcharacteristics, and E represents regional economic characteristics. We use a multinomial
logit model to analyze plants’ choices among the three technologies.
A plant will choose the technological option m if and only if it brings the highest economic
return among all the available choices. In other words, the probability that plant i will choose
alternative m is9

P r(Yi = m) = P r(Vim > Vij ) f or all j = 1, 2, 3, j ̸= m=⇒ P r(Zim + ϵim ) > P r(Zij + ϵij )(2)=⇒ P r(Zim − Zij ) > P r(ϵij − ϵim ) f or all j = 1, 2, 3, j ̸= m.
Based on McFadden (1973), the error terms ϵij are assumed to be independently and identically distributed with Weibull distribution F (ϵij ) = exp[exp(−ϵij )]; then,P r(Yi = m) =exp(Zim ),exp(Zi1 ) + exp(Zi2 ) + exp(Zi3 )(3)

P r(Yi = k) =exp(Zik ).
exp(Zi1 ) + exp(Zi2 ) + exp(Zi3 )(4)

From equations (3) and (4), the logarithm of the ratio of the probability of outcome j = m
to that of outcome j = k is(log

P r(Yi = m)
P r(Yi = k))
= (βm1 − βk1 )Pi + (βm2 − βk2 )Si + (βm3 − βk3 )Oi + (βm4 − βk4 )Ei (5)Pi includes policies for controlling NOx emissions. In our analysis, there are five explanatory variables for policies. 12th FYP is a dummy variable denoting whether a boiler wastransformed during the 12th Five-year Plan. NOx Control Area is a dummy variable denoting whether a boiler was built in the NOx control area designated under the Key Regions
Plan.2 This dummy variable takes the value of one if a boiler was operating in a NOx control area and transformed after 2012. Subsidy 2011 and Subsidy 2013 are dummy variables
for subsidy policies for boilers operating denitration equipment implemented in November
2011 in 14 specific provinces and January 2013 nationwide, respectively. Subsidy 2011 takes
2

These are 44 cities and areas that belong to the central region of Liaoning, around Wuhan, and in eachof Changsha–Zhuzhou–Xiangtan, Chengdu–Chongqing, and the urban area of Western Taiwan Straits.

10the value of one if the boiler operates in 14 pilot provinces and was transformed in 2011or 2012. Subsidy 2013 takes value of one if the boiler was transformed in 2013. Provincial
Target represents the reduction target for NOx until 2015 in each province; it is denoted bya percentage reduction from 2010 emissions in each province. Since the provincial target isannounced in 2011, the variable takes zero for all boilers that installed the control equipment
before that year.
Si is the stringency of emissions standards for NOx emitted by the thermal power sector.
This is represented by the Emission Standard variable, which uses the values applied toeach boiler under GB13223-1996, GB13223-2003, and GB13223-2011. For example, we set
the value of Emission Standard equal to 1,100 if a boiler started operations before 1996
and transformed before 2010 because the GB applied to this boiler when it installed control
equipment was GB13223-2003, and, under this GB, the emissions standard applied to thisboiler was 1,100 mg/m3 . Likewise, we set the emissions standard level equal to 650 if
operations started between 1997 and 2003 and the transformation took place earlier than2010. Similarly, the value equals 450 if the boiler started operations earlier than 2003 andtransformed after 2011 or if its first operation year was between 2004 and 2011. We set thevalue equal to 100 if the first year of operation was after 2012.
Oi summarizes the individual characteristics of boilers. Capacity is a variable reflecting
boiler capacity. Installation Age measures the years that passed between when the boiler
started operations and when NOx control equipment was installed. Selfbuilt is a dummy
variable that takes the value of one if the plant installed control equipment that it had
manufactured; if the plant installed control equipment manufactured by other companies,
the value is zero.
Ei summarizes the economic characteristics of each province. We use four variables: grossregional products (GRP), value-added in the manufacturing sector, utilization of the thermal
power sector, and share of thermal power to total capacity. GRP represents the real GRP
in each province, and Industrial Value-added is the real value added of the manufacturing11

sector in each province. Utilization represents the utilization of thermal power capacity ineach province; we calculate this variable by dividing the generated electricity by the capacityof thermal power plants in each province. Share of Thermal Power measures the capacity
share of the thermal power sector; it is calculated by dividing the capacity of thermal power
generation by the total capacity of the electricity sector in each province.

3.2

Data

We use boiler-level data from the Denitration Equipment List of National Coal-Fired
Boilers, which is accessible from the website of the data center of the Chinese Ministryof Environmental Protection (http://datacenter.mep.gov.cn). The list contains information
on 1,135 utility and non-utility boilers that have installed denitration equipment and areoperating in China as of 2013. Since the Chinese Ministry of Environmental Protection(2014a) reports that there are 1,238 pieces of denitration equipment in thermal power plants
in China as of 2013, it captures 92% of equipment operating at that moment. We collectinformation on the name of the plant, the generation capacity, the year in which it started
operations, the year in which it adopted denitration equipment, the construction company
that installed the equipment, the type of denitration technology chosen, and the province
in which each boiler is operating. Unfortunately, the database does not contain informationon the boilers without denitration equipment, restricting our analysis to the technology
choices of those that installed them. Figure 1 presents the cumulative number of boilers
with denitration equipment in our dataset and compares it with the total number of boilers
with capacity larger than 6MW from 2001 to 2013. It is clear that our dataset captures only
a fraction of boilers operating in China.3
Descriptive statistics are shown in Table 4. On average, the boilers in our sample had
a capacity of 381 MW and were 6.78 years old when denitration equipment was installed.
Figure 2 shows the number of boilers that started operation in each year. In the sample,
3

In 4.4, we analyze the decision to install denitration equipment by looking at the installation situationof 1,083 boilers operating in 2012.

12

81.59% of the boilers were built after 2000. There was a significant increase in the numberof boilers after 2003, as the Chinese economy started to grow rapidly after China joined theWorld Trade Organization in 2000. Many boilers in our dataset had denitration equipment
installed after 2007 (see Figure 3). Although the earliest installation took place in 2001,
only nine boilers featured denitration equipment until 2006. The number of boilers with theNOx control equipment exceeded 100 after 2011; among these, 84% of the boilers installed
control equipment during the 12th Five-year Plan period.
[Table 4][Figure 1][Figure 2][Figure 3]
Among the 1,135 boilers in our dataset, 894 (79%) installed SCR technology, 209 (18%)
installed SNCR technology, and 32 (3%) installed SNCR−SCR technology. Various factors
potentially aﬀect these choices. Figure 4 is a box chart indicating the distribution of theboiler size for the three technology choices. It suggests that SCR technologies are chosen bylarger boilers while SNCR are installed on smaller units. The age of the boiler also mattersfor technology choice. Figure 5 shows that SNCR−SCR is installed on old boilers, while
SCR is installed on new units.
Of the total, 275 boilers (24%) installed denitration equipment in the year they began
operations.4 It is very likely that these boilers are equipped with NOx control technology
when they are constructed. Interestingly, many boilers that installed equipment in the firstyear of their operation choose SCR and SNCR technology, but none installed SNCR−SCR.
This can be also confirmed by Figure 6, which shows the relationship between the year the
4

In Appendix A, we investigate the characteristics of these boilers that installed the denitration equipment in the first year of their operation.

13

boilers began operating and the year they installed their NO x control equipment. The upperparts of these figures include frontier lines indicating boilers that installed equipment in theyear they began operating. While there are dots on the frontier lines in the SCR and SNCR
panel, there are no dots on the line in the SNCR−SCR panel. The dots in the SNCR panel
are concentrated on the right, indicating that most of the boilers installed SNCR technology
after 2010.
[Figure 4][Figure 5][Figure 6]

4

Empirical Results

4.1

Baseline analysis

We use a multinomial logit model to investigate the factors aﬀecting plants’ choices among
the three denitration technologies. The results are shown in Table 5. Since we take SNCR
technology as the base technology, the coeﬃcients in the models show the eﬀect of various
factors on the choice of SCR or SNCR–SCR technology over SNCR technology. As noted
earlier, SNCR has the lowest investment cost but also the lowest denitration eﬃciency. To
avoid correlation with the dummy variable for the 12th Five-year Plan period (12th FYP ),we exclude variables concerning the subsidy policy (i.e., Subsidy 2011 and Subsidy 2013 ) in
these estimations.
[Table 5]
Column (1) in Table 5 shows how various policies influence each plant’s choices of technology. We also estimate models with control variables (GRP and Industrial Value-added );the results are in columns (2) and (3). The coeﬃcient of 12th FYP has a negative sign
14and is statistically significant for the choice of SCR over SNCR. On the other hand, thecoeﬃcient of NOx Control Area variable has a positive sign and is statistically significant for
SCR technology (columns (1)–(3)). While SNCR technology (the cheapest technology) was
preferred during the 12th Five-year Plan period over SCR technology (the most expensive
technology), this is not the case for the plants located in the NOx control areas. In columns(4) to (6) of Table 5, we use Targeted Plant in 12th FYP, rather than 12th FYP. The variable is a dummy denoting plants targeted in the 12th Five-year Plan; taking the value of
one when a boilers is larger than 300 MW and transformed during the 12th Five-year Plan,and zero otherwise. The coeﬃcient of this variable is statistically insignificant for the choiceof SCR over SNCR, suggesting that there is no diﬀerence among these technologies in termsof firm preference.
Regarding boiler characteristics, Capacity is both positive and statistically significant, inline with our expectation that plants with larger boilers tend to choose SCR or SNCR–SCR
over SNCR technology. Installation Age is positive and statistically significant for SCR technology, suggesting that the plants with older boilers tend to choose SCR technology. The
dummy variable for the self-built denitration equipment (Selfbuilt) is negative and statistically significant for the choice of SNCR–SCR. Emission Standard is negative and statisticallysignificant for the choice of SCR over SNCR technology; since a lower-value for this variablemeans stricter regulation, it is reasonable to derive a negative coeﬃcient for the choice of amore eﬃcient technology option.
Therefore, we find a negative and statistically significant results for the dummy variableof the 12th Five-year Plan concerning the more expensive technological choices. On the other
hand, the eﬀect is statistically insignificant when we use the Targeted Plant in 12th FYP ; thisdiﬀerence suggests that plants with boilers larger than 300 MW are indiﬀerent about which
technologies to choose to control NOx . Furthermore, two policies might have promoted the
choice of SCR technologies during the 12th Five-year Plan period. The positive coeﬃcientof the NOx Control Area dummy can be interpreted to mean that plants in NOx control

15

areas tend to choose more expensive technology to control NOx and thus fulfill the stringent
requirements under the policy. The statistically significant coeﬃcient of Emission Standard
also suggests that SCR technology was chosen under more stringent emission regulations.
As an additional analysis, we create the dummy variable Targeted Plant in Key Regions
to denote the installation of denitration equipment in thermal power generating units thatare larger than 200 MW, had operated for fewer than 20 years by 2013, and operated in
key regions. The results are shown in Table 6. The coeﬃcient of the variable is negative
but statistically insignificant for both SCR and SNCR–SCR technologies, suggesting thatthe boilers targeted in the Key Regions Plan did not strictly comply with the requirement
immediately.
[Table 6]
Regarding boiler capacity, plants with larger-sized boilers might obey the policy by choosing a higher-eﬃciency technology because doing so is economically reasonable for them. Thisis also suggested by the positive and significant coeﬃcient of the Capacity variable for choosing SCR and SNCR–SCR than SNCR technology. To investigate whether the eﬀect of thetargeted policy might diﬀer according to boiler size, we use diﬀerent boiler sizes (i.e., 300–
800 MW instead of 200 MW) to create the Targeted Plant in Key Regions variable. The
results are presented in Table 7. Targeted Plant in Key Regions is positive and statisticallysignificant when the boiler is larger than 600 MW, suggesting that, under this policy, boilers
operating for fewer than 20 years will choose SCR technology when the boiler is larger than
600 MW. Thus, the requirement stipulated in the Key Regions Plan might aﬀect the choiceof plants with larger boilers but not that of plants with smaller ones.
[Table 7]

16

4.2

Comparisons before and after 2010

This subsection examines changes in plants’ choices of technology before and after the
12th Five-year Plan. We conduct separate estimations for subsamples based on the timingof their installation of control equipment in boilers (i.e., before or after 2010). We also
investigate diﬀerences among the eastern, central, and western regions of China by including
dummy variables (East and West) and using the central region as a base category. Income
is the highest in the eastern region, and the western region lags behind in terms of economic
development. Some studies have pointed out that the regional diﬀerences among Chinese
provinces aﬀect their energy consumption and environmental policies (Song et al., 2013; Xu
and Lin, 2016).
[Table 8]
The estimation results are presented in Table 8. East and West are positive and statistically significant until 2010; during the 12th Five-year Plan period, however, they were notsignificant for the choice of SCR technology. These results suggest that regional diﬀerences
do not play a significant role in the plants’ choice of SCR technology after 2010.
Capacity is also positive and statistically significant after 2010 but is statistically insignificant for choices of SNCR–SCR until 2010. Installation Age is positive and statisticallysignificant after 2010 for SCR but negative and statistically significant for the period until
2010 for the choice of SNCR−SCR. Plants with newer boilers prefer SNCR−SCR technology
before 2010, and those with older boilers prefer SCR technology after 2010.
The stringency of emission standards (Emission Standard ) is statistically insignificant
for SCR and is positive and statistically significant for SNCR–SCR technology until 2010;
after 2010, however, it is negative and statistically significant for both SCR and SNCR–SCR technologies. Since the lower value of Emission Standard points to a stricter emission
regulation, the negative sign means that the technology is chosen when the regulation istighter. The result suggests that plants under a stricter regulation prefer SCR and SNCR–
17

SCR technologies over SNCR technology after 2010. Until 2010, however, the eﬀects ofemissions standards had no impact on the choice of technology.
The results discussed above can be summarized as follows. First, until 2010, SCR technology was chosen more readily by plants in the eastern and western regions than by plants
in the central region. This can be explained by the regional diﬀerences in capital investmentin the early 2000s. Since the western region was less developed than the other two regions,huge investments were made in this region under the Western Development Program. Because of this, plants in the western region were more able to purchase expensive pollution
control equipment than those in the central region were. After 2010, as the economy in thecentral region caught up, these regional diﬀerences might have become insignificant. Second, the results suggest that plants under stricter emission standards will choose SCR and
SNCR–SCR technologies during the 12th Five-year Plan period. A more stringent standard
might play a role in plants’ preference for eﬃcient technology during this period.

4.3

Subsidy policy

This subsection discusses the eﬀect of subsidy policies during the period of the 12thFive-year Plan. The subsidy is oﬀered to plants whose boilers are fitted with denitrationequipment and takes the form of a premium on the electricity prices. We use the dummy
variables Subsidy 2011 and Subsidy 2013 to express two kinds of subsidies. Subsidy 2011refers to the 14 provinces taking part in this subsidy’s pilot program, initiated in November
2011. Subsidy 2013 takes the value of one if the installation of control equipment took place
after January 2013, when the subsidy was extended nationwide.
[Table 9]
The results in Table 9 show that Subsidy 2011 is negative and statistically significant
for choosing SCR and SNCR–SCR technology over SNCR technology. This suggests thatthe subsidy policy oﬀered in the 14 pilot provinces might have promoted investment in18

cheaper technology. On the other hand, the coeﬃcient for Subsidy 2013 is statisticallyinsignificant in most of the estimations. When the subsidy was extended nationwide, it did
not aﬀect the plants’ choice of technology. After January 2012, stringent emission standards
were implemented, which might have promoted the choice of technologies that were highly
eﬃcient at removing emissions; this eﬀect might have been strong enough to oﬀset the impactof the subsidy (i.e., to choose a cheaper technology).

4.4

Analysis of the installation status in 2012

All boilers in our dataset had installed denitration equipment by 2013. In this subsection,
we investigate the decision to install pollution control equipment by looking at the installation status as of 2012. In our dataset, the 538 boilers (50% of 1,083 boilers operating in2012) installed denitration equipment in 2013 did not have denitration equipment in 2012.
Therefore, we can use a logit model to investigate the factors aﬀecting the installtion decision as of 2012 by regarding these 538 boilers as being without denitration equipment.5 We
define Installation2012 as a dummy variable reflecting the installation status of denitrationequipment as of 2012. It takes the value of one if the boiler had denitration equipment
installed by 2012 and zero otherwise. We estimate the following model:6

logit(P r(Installation2012i )) = β1 Pi + β2 Oi + β3 Ei(6)[Table 10]
The estimation results are shown in Table 10. The number of observation is reduced
5

There remains the issue of sample selection, since all the 1,083 boilers in this analysis had installed
control equipment by the end of 2013. As of 2013, there were 7,515 boilers in China, including non-utility
power plants (Chinese Ministry of Environmental Protection, 2014a).
6
Some variables used in the technology choice model are not included or are modified in the logit model
because of diﬀerence in assumptions. We cannot include Targeted Plant in 12th FYP or 12th FYP, sincethese variables perfectly predicts the installation status. We include Provincial Target 2012 to represents
the reduction target for NOx until 2015 in each province as of 2012. Moreover, as we assumed that the538 boilers are without equipment, the variable Selfbuilt and Emission Standard are not used. We used thevariable First Operation Year instead of Installation age. First Operation Year represents the year that theboiler started their operation.

19

to 1,083, since 52 boilers that started their operation in 2013 are excluded in this analysis.
Provincial Target 2012 is positive and statistically significant in all models, while NOx Control Area is mostly not statistically significant. These results suggest that provincial (rather
than national) policy is more eﬀective in promoting control equipment. Capacity and First
Operation Year is positive and statistically significant, suggesting that larger sized boilers
and newer boilers tend to introduce denitration technologies. Utilization and Share of Thermal Power are not statistically significant. In other words, the results can be interpreted tomean that boilers that are smaller, older, and are in provinces with lower emissions reduction
targets tend not to have the NOx control equipment installed.

5

Conclusion
This study investigated the choices of denitration technology in the Chinese thermal

power sector. Considering the choices made by 1,135 boilers operating in China in 2013, wederived the following results. First, the 12th Five-year Plan might encourage plants to choose
SNCR technology, the cheapest of the three denitration technological options. We consider
that, under the 12th Five-year Plan, strict policy enforcement was implemented, and plants
chose the technology that would satisfy the emission target at the cheapest cost. The results
suggest that the plants have some flexibility in choosing a preferred technology even thoughcommand-and-control policies constitute major instruments of Chinese environmental policy.
As Liu et al. (2013) point out, the aﬀordability of energy costs is an important driver of
their energy management strategies for Chinese companies.
Second, prior to the 12th Five-year Plan period, regional diﬀerences had significant eﬀects
on technology choices; these later disappeared, perhaps due to the economic developmentthat occurred across all regions of China. On the other hand, the eﬀect of emission standards
was statistically significant only during the 12th Five-year Plan period. The implementationof emission standards after 2011 is thought to be ever more stringent.

20

Finally, the subsidy of electricity prices for plants with denitration equipment might
have aﬀected their technology choice. Unfortunately, since the subsidy does not depend on
the technology option chosen, plants might choose the cheapest technology to lower theirinvestment costs. As many studies have pointed out, an incautious subsidy policy may leadto overcapacity, overinvestment, and fierce competition in the power sector (Shen and Luo,
2015; Zhang et al., 2016).
Chinese policy for controlling SO2 has advanced in the 11th Five-year Plan period(Schreifels et al., 2012; Ma and Takeuchi, 2016). Control of NOx began in earnest during the 12th Five-year Plan period. Our results suggest that incentives to save investment
costs and receive subsidies might influence the choice of technology: therefore, the sophistication of the design of economic instruments could play a role in China’s development ofeﬀective and eﬃcient environmental policy.
While this study focused on the technology choice of boilers that installed NOx control
equipment, it is important to note that it does not capture the decision making for the large
portion of boilers that have not installed the equipment. We attempted to consider thisdecision in subsection 4.4, but it is not free from the sample selection bias, and the result
should be interpreted with caution. Further study is necessary to understand the full pictureof NOx control strategy in the Chinese thermal power sector.

Acknowledgements
This work was supported by JSPS KAKENHI Grant Numbers JP16H03006, JP26241033.

21

Appendix A
To examine the diﬀerence between boilers with equipment installed from the beginningand boilers with it installed after years of operation, we use the following logit model:

logit(P r(AgeZeroi )) = β1 Pi + β2 Si + β3 Oi + β4 Ei(7)where AgeZero is a dummy variable that takes value of one when the boiler has NOx control
equipment installed at the start of operations and zero otherwise. The model also includes
dummy variables SCR and SNCR−SCR to indicate the use of these technologies. By looking
at the coeﬃcient of these variables, we can investigate the characteristics of boilers with
control equipment installed in the first year.
[Table 11]
The estimation results are summarized in Table 11. Capacity and First Operation Yearare positive and statistically significant in all models, suggesting that larger and recent
boilers tend to have denitration equipment installed in the first year. SCR is positive andstatistically significant in all models, meaning that SCR technology tends to be installedin the first year, relative to SNCR technology. On the other hand, SNCR−SCR is notstatistically significant. 12th FYP, NOx Control Area and Provincial Target are all negativeand statistically significant. These results might be interpreted to mean that these policies
for NOx control promote the installation of control equipment on boilers that did not haveequipment in their first year of operation.

22

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26

Table 1: Comparison of SCR and SNCR technology
SCR
SNCR
Catalyst

Yes (30% of investment)

No

Pressure loss

Yes

No

Size

Large

Small

Outside of the boiler

Inside of the boiler

Eﬃciency

80%

25 − 40%

Cost of construction

High

Low

Produce N H4 HSO4–

Reduction process

Side eﬀect

Table 2: Emission standards for NOx in China

GB13223-1996
GB13223-2003
GB13223-2011

I

Classification based on first year of operation
II

N.S.

N.S.

650mg/m3(Before Aug.1, 1992)(Aug.1, 1992–Dec.31, 1996)(After Jan.1, 1997)

1100mg/m3

650mg/m3

450mg/m3(Before Dec.31, 1996)(Jan.1, 1997–Dec.31, 2003)(After Jan.1, 2004 )450mg/m3(Before Dec.31, 2011)

100mg/mIII

3(After Jan.1, 2012)

Note: The values indicate the most stringent standards applied for boilers that started operations in eachperiod (as shown in the bracket). N.S.: not specified. GB 13223-1996 standards are applied only to casesof 1000t/h or more.

27

Table 3: NOx target in 12th Five-year Plan for each province
TargetProvince
Emissions in 2010
Target in 2015 Change from 2010 (%)
Beijing
19.8
17.4
-12.3
Tianjin
34
28.8
-15.2
Hebei
171.3
147.5
-13.9
Shanxi
124.1
106.9
-13.9
Inner Mongolia
131.4
123.8
-5.8
Liaoning
102
88
-13.7
Jilin
58.2
54.2
-6.9
Heilongjiang
75.3
73
-3.1
Shanghai
44.3
36.5
-17.5
Jiangsu
147.2
121.4
-17.5
Zhejiang
85.3
69.9
-18
Anhui
90.9
82
-9.8
Fujian
44.8
40.9
-8.6
Jiangxi
58.2
54.2
-6.9
Shandong
174
146
-16.1
Henan
159
135.6
-14.7
Hubei
63.1
58.6
-7.2
Hunan
60.4
55
-9
Guangdong
132.3
109.9
-16.9
Guangxi
45.1
41.1
-8.8
Hainan8
9.8
22.3
Chongqing
38.2
35.6
-6.9
Sichuan
62
57.7
-6.9
Guizhou
49.3
44.5
-9.8
Yunnan52
49-5.8
Xizang3.8
3.8
0
Shannxi
76.6
69
-9.9
Gansu
42
40.7
-3.1
Qinghai
11.6
13.4
15.3
Ningxia
41.8
39.8
-4.9
Xinjiang
67.6
67.6
0
Total
2,273.6
2,021.6-11.1
Source: Xing (2012).
Note: The unit is in 10, 000t; the total emissions target is 20, 462kt. The diﬀerence in the
total emissions target in this table is used by the Chinese government for reduction of NOxemissions trading.

28

Table 4: Descriptive statisticsN

Mean

Std.Dev.

Min

Max

12th FYP (dummy)

1,135

0.843

0.364

0

1

Targeted Plant in 12th FYP (dummy)

1,135

0.082

0.275

0

1

NOx Control Area (dummy)

1,135

0.033

0.178

0

1

Subsidy 2011a(dummy)

1,135

0.186

0.389

0

1

Subsidy 2013 (dummy)

1,135

0.520

0.500

0

1

Selfbuilt (dummy)

1,135

0.025

0.155

0

1

Provincial Target (%)

1,135

0.108

0.067

-0.2230.180

Capacity (GW)

1,135

0.381

0.256

0.003

1.03

Installation Ageb(year)

1,135

6.782

7.247

0

52

Emission Standard (1, 000 mg/m3 )

1,135

0.434

0.158

0.1

1.1

Utilization (1, 000 h)

1,135

4.956

1.821

3.295

46.44

Share of Thermal Power (%)

1,135

0.787

0.159

0.137

0.999

GRP (trillion RM B)

1,135

22.22

13.64

1.299

47.98

Industrial Value-added (trillion RM B)

1,135

11.41

7.807

0.463

27.46

Note: Data regarding the Key Control Area and provincial targets were obtained from the
Chinese Ministry of Environmental Protection (2012) and Xing (2012). GRP and the valueadded of the manufacturing sector were obtained from the China Statistical Yearbook (China
State Statistical Bureau, 2002-2014). Province-level capacity and generation data were obtained
from the CEIC database (CEIC, 2015).
a
The 14 pilot provinces that implemented trial subsidies on electricity price starting in November
2011 were: Beijing, Tianjin, Hebei, Shanxi, Shandong, Shanghai, Zhejiang, Jiangsu, Fujian,Guangdong, Hainan, Sichuan, Gansu, and Ningxia. The dummy variable Subsidy 2011 takes
the value of one if the control equipment was installed after November 2011 and it is located in
one of these 14 provinces.
b
Installation Age refers to the number of years that passed between the first operation of theboiler and the installation of denitration equipment.

29

Table 5: Baseline results
SCR
12th FYP

(1)

(2)

(3)

-1.822∗∗-1.698∗∗-1.738∗∗(0.776)(0.813)(0.825)

Targeted Plant in 12th FYP

(4)

(5)

(6)

-0.258(0.735)-0.392(0.732)-0.379(0.731)

Provincial Target

0.019(0.040)0.012(0.042)0.014(0.043)-0.057∗∗(0.025)-0.067∗∗∗(0.024)-0.066∗∗∗(0.025)NOx Control Area

1.835∗(1.060)1.846∗(1.079)1.831∗(1.072)

1.645(1.060)1.674(1.091)

1.632(1.089)

Capacity

17.21∗∗∗(1.358)17.45∗∗∗(1.479)17.35∗∗∗(1.457)

16.16∗∗∗(1.178)16.87∗∗∗(1.370)16.79∗∗∗(1.353)

Installation Age

0.080∗∗∗(0.021)0.079∗∗∗(0.021)0.079∗∗∗(0.021)0.072∗∗∗(0.019)0.072∗∗∗(0.019)0.072∗∗∗(0.019)Selfbuilt-0.013(0.468)-0.039(0.471)-0.024(0.471)-0.402(0.396)-0.405(0.394)-0.383(0.398)Emission Standard-2.713∗∗(1.123)-2.714∗∗(1.131)-2.712∗∗(1.138)-1.671(1.177)-1.955∗(1.081)-1.947∗(1.083)

Utilization

0.903∗∗∗(0.348)0.899∗∗∗(0.342)0.899∗∗∗(0.345)0.918∗∗(0.365)0.897∗∗(0.349)0.896∗∗(0.351)

Share of Thermal Power-0.799(1.015)-0.904(1.035)-0.828(1.023)0.133(0.988)-0.154(1.002)-0.026(0.994)GRP

0.007(0.013)

Industrial Value-added
Constant
SNCR
SNCR-SCR
12th FYP

0.017(0.012)0.007(0.022)-4.242∗∗(1.766)(Baseline)-4.364∗∗(1.782)-4.324∗∗(1.805)-5.244∗(2.705)-4.612∗(2.683)-4.886∗(2.732)

Targeted Plant in 12th FYP

0.026(0.020)-5.917∗∗∗(1.446)-5.876∗∗∗(1.415)-5.886∗∗∗(1.419)-12.28∗∗∗(0.918)-14.18∗∗∗(0.908)-12.49∗∗∗(0.911)

Provincial Target

0.239(0.167)0.194(0.166)0.214(0.169)-0.031(0.047)-0.062(0.042)-0.056(0.042)NOx Control Area

-7.239∗∗∗(1.578)-7.583∗∗∗(1.566)-8.559∗∗∗(1.578)-9.418∗∗∗(1.233)-10.99∗∗∗(1.250)-9.405∗∗∗(1.261)

Capacity

9.166∗∗∗(2.167)

9.540∗∗∗(2.203)9.366∗∗∗(2.210)7.486∗∗∗(2.027)8.833∗∗∗(2.105)8.605∗∗∗(2.111)

Installation Age

0.030(0.033)0.029(0.033)0.030(0.033)0.023(0.032)0.024(0.032)0.024(0.032)

Selfbuilt-11.90∗∗∗(0.597)-12.64∗∗∗(0.602)-13.46∗∗∗(0.603)-13.65∗∗∗(0.457)-15.33∗∗∗(0.460)-13.64∗∗∗(0.458)Emission Standard

0.404(2.034)0.350(1.996)0.386(2.013)1.666(2.209)1.018(2.128)1.125(2.144)

Utilization

1.046∗∗∗(0.351)1.037∗∗∗(0.345)1.040∗∗∗(0.348)1.065∗∗∗(0.368)1.033∗∗∗(0.352)

1.037∗∗∗(0.354)

Share of Thermal Power5.808∗∗(2.279)5.577∗∗(2.256)5.759∗∗(2.272)6.645∗∗∗(2.034)

6.112∗∗∗(2.081)6.470∗∗∗(2.070)GRP

0.038∗∗(0.018)0.017(0.018)Industrial Value-added

0.016(0.031)-12.30∗∗∗-12.51∗∗∗-12.46∗∗∗-14.15∗∗∗-14.15∗∗∗(2.952)(2.961)(3.001)(2.719)(2.774)
N
1135
1135
1135
1135
1135
P seudo R2
0.543
0.544
0.544
0.536
0.539
∗
∗∗
∗∗∗
Note: Robust standard errors in parentheses. p < 0.1,
p < 0.05,
p < 0.01.
Constant

30

0.055∗(0.031)-14.27∗∗∗(2.788)1135
0.538

Table 6: Targeted plant in key regions
(1)

(2)

(3)

-0.297(0.516)-0.353(0.524)-0.343(0.523)NOx Control Area

1.746∗(1.054)

1.797∗(1.082)1.754(1.080)

Provincial Target-0.054∗∗(0.025)-0.062∗∗∗(0.023)-0.062∗∗∗(0.024)

Capacity

16.37∗∗∗(1.354)17.08∗∗∗(1.559)17.00∗∗∗(1.546)

Installation Age

0.072∗∗∗(0.019)0.071∗∗∗(0.019)0.072∗∗∗(0.019)Selfbuilt-0.429(0.409)-0.438(0.410)-0.415(0.413)Emission Standard-1.543(1.047)-1.768∗(0.977)-1.767∗(0.979)

Utilization

0.949∗∗∗(0.361)0.933∗∗∗(0.345)0.930∗∗∗(0.347)

Share of Thermal Power

0.098(0.997)-0.210(1.005)-0.082(0.997)

SCR
Targeted Plant in Key Regions

GRP

0.016
(0.012)

Industrial Value-added

0.025(0.020)-6.152∗∗∗(1.545)(Baseline)-6.152∗∗∗(1.522)-6.152∗∗∗(1.525)-1.304(0.981)-1.473(1.028)-1.442(1.032)NOx Control Area

-7.828∗∗∗(1.425)-7.778∗∗∗(1.464)-8.083∗∗∗(1.475)

Provincial Target-0.013(0.051)-0.044(0.043)-0.038(0.043)

Capacity

8.302∗∗∗(2.245)9.780∗∗∗(2.376)9.533∗∗∗(2.388)Installation Age

0.027(0.031)

0.028(0.031)

0.027(0.031)

Selfbuilt-12.81∗∗∗(0.453)-13.06∗∗∗(0.453)-13.24∗∗∗(0.452)Emission Standard

2.114(2.022)

1.502(1.924)1.601(1.942)

Utilization

1.103∗∗∗(0.365)1.074∗∗∗(0.348)1.077∗∗∗(0.350)Share of Thermal Power

6.751∗∗∗(2.040)6.211∗∗∗(2.064)6.604∗∗∗(2.070)Constant
SNCR
SNCR-SCR
Targeted Plant in Key Regions

0.040∗∗(0.019)GRP

0.059∗(0.034)

Industrial Value-added
ConstantN
P seudo R2-14.97∗∗∗(2.772)1135
0.537-15.08∗∗∗(2.832)1135
0.540-15.21∗∗∗(2.872)1135
0.539

Note: Robust standard errors in parentheses. ∗ p < 0.1, ∗∗ p < 0.05,∗∗∗ p < 0.01

31

Table 7: Comparisons by capacity
(1)
200MW

(2)
300MW

(3)
400MW

(4)
500MW

(5)
600MW

(6)
700MW

(7)
800MW

-0.297(0.516)-0.267(0.592)-0.267(0.592)-0.267(0.592)-0.267(0.592)

6.609∗∗∗(0.952)

3.494∗∗∗(1.160)

Provincial Target-0.054∗∗(0.025)-0.054∗∗(0.026)-0.054∗∗(0.026)-0.054∗∗(0.026)-0.054∗∗(0.026)-0.055∗∗(0.024)-0.055∗∗(0.024)NOx Control Area

1.746∗(1.054)1.747(1.069)1.747(1.069)1.747(1.069)1.747(1.069)1.680(1.051)1.680(1.051)

Capacity

16.37∗∗∗(1.354)16.28∗∗∗(1.344)16.28∗∗∗(1.344)16.28∗∗∗(1.344)16.28∗∗∗(1.344)16.10∗∗∗(1.149)16.10∗∗∗(1.149)Installation Age

0.072∗∗∗(0.019)0.072∗∗∗(0.019)0.072∗∗∗(0.019)0.072∗∗∗(0.019)0.072∗∗∗(0.019)0.072∗∗∗(0.019)0.072∗∗∗(0.019)Selfbuilt-0.429(0.409)-0.424(0.405)-0.424(0.405)-0.424(0.405)-0.424(0.405)-0.410(0.400)-0.410(0.400)Emission Standard-1.543(1.047)-1.509(1.050)-1.509(1.050)-1.509(1.050)-1.509(1.050)-1.554(1.045)-1.554(1.045)

Utilization

0.949∗∗∗(0.361)0.929∗∗(0.363)0.929∗∗(0.363)0.929∗∗(0.363)0.929∗∗(0.363)0.919∗∗(0.366)0.919∗∗(0.366)

Share of Thermal Power

0.098(0.997)0.099(0.994)0.099(0.994)0.099(0.994)0.099(0.994)0.095(0.981)

0.095(0.981)-6.152∗∗∗(1.545)(Baseline)-6.054∗∗∗(1.524)-6.054∗∗∗(1.524)-6.054∗∗∗(1.524)-6.054∗∗∗(1.524)-5.967∗∗∗(1.504)-5.967∗∗∗(1.504)-1.304(0.981)-15.392∗∗∗(0.664)-15.392∗∗∗(0.664)-15.392∗∗∗(0.664)-15.392∗∗∗(0.664)-4.249∗∗∗(1.440)-6.056∗∗∗(1.642)

Provincial Target-0.013(0.051)-0.005(0.050)-0.005(0.050)-0.005(0.050)-0.005(0.050)-0.023(0.046)-0.023(0.046)NOx Control Area

-7.828∗∗∗(1.425)-9.063∗∗∗(1.560)-9.063∗∗∗(1.560)-9.063∗∗∗(1.560)-9.063∗∗∗(1.560)-11.143∗∗∗(1.214)-10.398∗∗∗(1.214)

Capacity

8.302∗∗∗(2.245)8.678∗∗∗(2.155)8.678∗∗∗(2.155)8.678∗∗∗(2.155)8.678∗∗∗(2.155)7.379∗∗∗(2.065)7.378∗∗∗(2.064)

Installation Age

0.027(0.031)

0.027(0.031)

0.027(0.031)

0.027(0.031)

0.027(0.031)0.020(0.032)0.020(0.032)

Selfbuilt-12.81∗∗∗(0.453)-15.54∗∗∗(0.451)-15.54∗∗∗(0.451)-15.54∗∗∗(0.451)-15.54∗∗∗(0.451)-15.32∗∗∗(0.456)-14.58∗∗∗(0.456)

Emission Standard

2.114(2.022)2.278(2.027)2.278(2.027)2.278(2.027)2.278(2.027)2.152(2.042)2.152(2.042)

Utilization

1.103∗∗∗(0.365)1.084∗∗∗(0.367)1.084∗∗∗(0.367)1.084∗∗∗(0.367)1.084∗∗∗(0.367)1.072∗∗∗(0.369)1.072∗∗∗(0.369)

Share of Thermal Power

6.751∗∗∗(2.040)6.746∗∗∗(2.032)6.746∗∗∗(2.032)6.746∗∗∗(2.032)6.746∗∗∗(2.032)

6.749∗∗∗(2.085)6.751∗∗∗(2.085)Constant-14.97∗∗∗(2.772)1135
0.537-15.10∗∗∗(2.735)1135
0.541-15.10∗∗∗(2.735)1135
0.541-15.10∗∗∗(2.735)1135
0.541-15.10∗∗∗(2.735)1135
0.541-14.61∗∗∗(2.705)1135
0.535-14.61∗∗∗(2.705)
1135
0.535

SCR
Targeted Plant in Key Regions

Constant
SNCR
SNCR-SCR
Targeted Plant in Key Regions

N
P seudo R2

Note: The dummy variables of Targeted Plant in Key Regions in columns (2)–(7) denotes the capacities of 300–800MW,
as shown, have operated for fewer than 20 years as of year 2013, and operated in key regions. Robust standard errors inparentheses. ∗ p < 0.1, ∗∗ p < 0.05, ∗∗∗ p < 0.01.

32

Table 8: Comparisons before and after 2010
(1)
Until 2010

(2)
After 2010

(3)
Until 2010

(4)
After 2010

(5)
Until 2010

(6)
After 2010

2.517∗(1.438)0.417(0.394)4.346∗∗∗(1.277)0.200(0.411)

4.409∗∗∗(1.301)0.214(0.418)West

16.413∗∗∗(1.114)1.043(0.874)15.04∗∗∗(1.149)1.085(0.875)15.89∗∗∗(1.153)1.099(0.876)

Capacity

21.19∗∗(9.132)

17.23∗∗∗(1.281)

16.91∗(9.354)17.49∗∗∗(1.345)

16.54∗(9.058)17.508∗∗∗(1.358)Installation Age

0.016(0.038)0.103∗∗∗(0.021)-0.004(0.046)0.101∗∗∗(0.022)-0.009(0.047)0.101∗∗∗(0.022)

Selfbuilt

9.937∗∗∗(3.676)-0.195(0.449)10.469∗∗∗(3.718)-0.227(0.451)

11.444∗∗∗(3.647)-0.214(0.453)Emission Standard-0.979(2.661)-3.149∗∗(1.490)0.285(2.548)-3.158∗∗(1.494)0.478(2.527)-3.133∗∗(1.492)

Utilization

1.254∗∗(0.553)0.538(0.429)-0.011(0.072)0.505(0.420)-0.035(0.057)0.480(0.427)

Share of Thermal Power-4.109∗(2.466)0.260(1.218)-2.990(2.824)0.011(1.299)-3.305(2.927)0.139(1.273)-0.078(0.051)

0.015(0.017)-0.135(0.085)0.025(0.029)

SCR
East

GRP
Industrial Value-added-6.424∗(3.419)(Baseline)-5.195∗∗∗(1.986)-0.769(4.281)-5.081∗∗∗(1.950)-0.586(4.171)-5.038∗∗(1.965)17.06∗∗∗(1.587)16.04∗∗∗(0.508)17.83∗∗∗(1.417)

14.61∗∗∗(0.777)18.66∗∗∗(1.423)

14.63∗∗∗(0.819)West

15.23∗∗∗(0.936)

16.52∗∗∗(1.505)13.53∗∗∗(0.981)16.28∗∗∗(1.568)14.43∗∗∗(0.971)16.37∗∗∗(1.578)Capacity

15.25(9.298)8.341∗∗∗(2.518)10.054(9.706)9.279∗∗∗(2.498)9.822(9.468)9.288∗∗∗(2.478)Installation Age-0.130∗∗(0.052)0.075∗(0.041)-0.167∗∗(0.067)0.069(0.043)-0.180∗∗(0.071)

0.067(0.043)Selfbuilt

10.230∗∗∗(3.542)-15.116∗∗∗(0.662)10.729∗∗∗(3.558)-15.010∗∗∗(0.694)11.720∗∗∗(3.499)-14.874∗∗∗(0.699)Emission Standard

7.275∗∗(3.383)-5.179∗∗(2.197)9.621∗∗(3.883)-5.041∗∗(2.295)10.006∗∗(3.910)-5.058∗∗(2.287)

Utilization

1.416∗∗(0.564)

1.119∗(0.648)0.152(0.126)1.075(0.704)0.115(0.116)0.952(0.690)Share of Thermal Power

4.432(4.698)10.045∗∗∗(3.067)5.507(5.168)7.751∗∗(3.266)

4.869(5.202)8.490∗∗∗(3.133)-0.138∗∗(0.062)0.054∗(0.029)-0.246∗∗(0.104)

0.096∗(0.056)-27.08∗∗∗(6.622)178
0.535-29.756∗∗∗(3.507)957
0.580

Constant
SNCR
SNCR-SCR
East

GRP
Industrial Value-added
ConstantN
P seudo R2-34.03∗∗∗(5.775)178
0.489-31.47∗∗∗(3.776)957
0.577-26.58∗∗∗(6.642)178
0.526-29.87∗∗∗(3.560)957
0.580

Note: Robust standard errors in parentheses. ∗ p < 0.1, ∗∗ p < 0.05, ∗∗∗ p < 0.01

33

Table 9: The eﬀects of subsidy on technological choice
(1)

(2)

(3)

-0.990∗∗-0.971∗(0.501)(0.505)-0.971∗(0.504)

Subsidy 2013

-0.571(0.468)-0.582(0.472)-0.573(0.473)

Provincial Target

0.017(0.039)0.0072(0.043)0.008(0.044)

Capacity

16.76∗∗∗(1.290)16.99∗∗∗(1.375)16.97∗∗∗(1.374)

Installation Age

0.101∗∗∗(0.024)0.0992∗∗∗(0.025)0.0992∗∗∗(0.025)

Selfbuilt

0.035(0.484)-0.007(0.490)0.005(0.490)Emission Standard-3.223∗∗(1.575)-3.190∗∗(1.622)-3.183∗∗(1.623)

Utilization

0.795∗(0.412)0.765∗(0.410)0.753∗(0.416)

Share of Thermal Power-0.851(1.039)-1.021(1.074)-0.934(1.064)SCR
Subsidy 2011

GRP

0.009
(0.016)

Industrial Value-added

0.0146(0.029)-4.675∗∗(2.005)(Baseline)-4.522∗∗(2.000)-4.505∗∗(2.011)-1.710∗(0.885)-1.720∗∗(0.870)-1.722∗∗(0.867)

Subsidy 2013-1.106(0.815)-1.242(0.811)-1.232(0.812)

Provincial Target

0.305∗(0.177)0.119(0.179)0.116(0.182)

Capacity

8.180∗∗∗(2.625)8.578∗∗∗(2.531)8.514∗∗∗(2.521)

Installation Age

0.073(0.045)0.069(0.045)0.067(0.046)

Selfbuilt-10.81∗∗∗(0.800)-13.12∗∗∗(0.770)-13.08∗∗∗(0.767)

Emission Standard-6.084∗∗∗(2.139)-5.697∗∗∗(2.182)-5.695∗∗∗(2.198)

Utilization

2.372∗∗∗(0.627)2.129∗∗∗(0.583)2.049∗∗∗(0.568)

Share of Thermal Power5.168∗(3.122)3.951(2.915)4.660(3.038)Constant
SNCR
SNCR-SCR
Subsidy 2011

0.051∗(0.026)GRP

0.086∗(0.050)Industrial Value-added
ConstantN
P seudo R2-21.21∗∗∗(5.988)957
0.574-17.64∗∗∗(4.726)957
0.577

Note: Robust standard errors in parentheses.
p < 0.05, ∗∗∗ p < 0.01

34

-17.59∗∗∗(4.555)
957
0.576
∗

p < 0.1, ∗∗Table 10: Installation status on 2012: logit models
Dependent variable: Installation2012
Provincial Target 2012

(1)
0.038∗∗∗(0.014)(2)
0.081∗∗∗(0.024)(3)
0.074∗∗∗(0.023)NOx Control Area

(4)0.038∗∗∗(0.014)(5)0.080∗∗∗(0.024)(6)
0.072∗∗∗(0.023)-0.560∗(0.328)-0.516(0.327)-0.505(0.328)Capacity

0.648∗∗∗(0.249)0.574∗∗(0.250)0.603∗∗(0.250)0.692∗∗∗(0.251)0.615∗∗(0.252)0.643∗∗(0.251)

Operation Year

0.041∗∗∗(0.013)0.039∗∗∗(0.013)0.039∗∗∗(0.013)0.040∗∗∗(0.013)0.039∗∗∗(0.013)0.039∗∗∗(0.013)

Utilization

0.007(0.028)0.010(0.027)0.009(0.027)0.002(0.028)0.005(0.027)0.004(0.027)

Share of Thermal Power

0.224(0.418)0.178(0.446)0.115(0.447)-0.028(0.440)-0.051(0.466)-0.107(0.466)-0.025∗∗∗(0.007)GDP-0.036∗∗∗(0.012)

Industrial Value-added

ConstantN
P seudo R2-0.024∗∗∗(0.007)-82.79∗∗∗(26.44)1083
0.027-79.42∗∗∗(25.63)1083
0.036-79.30∗∗∗(25.57)1083
0.033-0.035∗∗∗(0.012)-81.49∗∗∗(26.25)1083
0.029

Note: Robust standard errors in parentheses. ∗ p < 0.1, ∗∗ p < 0.05, ∗∗∗ p < 0.01

35

-78.25∗∗∗(25.45)1083
0.038-78.19∗∗∗(25.41)1083
0.035

Table 11: Installation in the first year of operation
Dependent variable: AgeZero
Capacity(1)1.845∗∗∗(0.461)(2)
2.298∗∗∗(0.572)(3)
1.857∗∗∗(0.450)(4)
1.943∗∗∗(0.488)Operation Year0.730∗∗∗(0.073)1.453∗∗∗(0.254)0.715∗∗∗(0.073)0.943∗∗∗(0.129)Selfbuilt-0.406(0.589)-0.561(0.520)-0.449(0.600)-0.679(0.567)

Emission Standard-2.056∗(1.098)-0.883(1.469)-2.530∗∗(1.152)-3.002∗∗(1.298)

Utilization

0.037(0.051)

0.005(0.038)0.024(0.050)0.043(0.034)

Share of Thermal Power

0.049(0.576)-1.192∗(0.719)-0.547(0.642)

1.771∗∗∗(0.620)SCR

1.420∗∗∗(0.385)1.022∗(0.528)1.499∗∗∗(0.394)

1.007∗∗(0.408)

SNCR-SCR-0.766(0.705)-0.864(0.776)-0.778(0.720)-1.084(0.824)GDP-0.004(0.008)0.005(0.011)-0.003(0.008)0.055∗∗∗(0.012)-5.846∗∗∗(0.715)12th FYP-1.851∗∗∗(0.483)NOx Control Area

-0.253∗∗∗(0.026)

Provincial Target

ConstantN
P seudo R2-1.5e+03∗∗∗(148.1)1135
0.502-2.9e+03∗∗∗(510.9)1135
0.715-1.4e+03∗∗∗(147.7)1135
0.510-1.9e+03∗∗∗(259.6)1135
0.615

Note: Robust standard errors in parentheses. ∗ p < 0.1, ∗∗ p < 0.05, ∗∗∗ p < 0.01.

36

8,000
6,000
Unit
4,000
2,000
0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Boilers larger than 6MW

Boilers with equipments

Figure 1: Total number of boilers and boilers with NOx control equipment: 2001–2013
Note: Total number of boilers is taken from respective years’ edition of China Electric Power Yearbook. Since the historical
data is available only for boilers with capacity larger than 6MW, it does not coincide with numbers mentioned in Section 1.
37

100
80
60
Unit
40
20
0

1960

1970

1980

1990

2000

2010

Year

Figure 2: Number of boilers starting operations: 1950s–2010s
38

600
400
Unit
200
0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Year

Figure 3: Number of boilers installed NOx control equipment: 2000–201339

1
Capacity size of boiler (GW)
0.4
0.6
0.8
0.2
0

SCR

SNCR

SNCR-SCR

Figure 4: Distribution of boiler capacity for each technology
40

50
Installation age (year)
20
30
40
10
0

SCR

SNCR

SNCR-SCR

Figure 5: Distribution of installation age for each technology
41

2000

2010
2000

2005
2010
Installation Year

2015

1950

2015

1960

1970

First Operation Year
1980
1990

2000

2005
2010
Installation Year

1950

1960

1970

First Operation Year
1980
1990

2000
First Operation Year
1980
1990
1970
1960
1950

2000

SNCR-SCR

2010

SNCR

2010

SCR

2000

2005
2010
Installation Year

Figure 6: First operation year and installation year422015