Plants' emission behaviors under dual control of pollutant concentration and quantity

Quantity-based and concentration-based limits are two common environmental permitting approaches utilized by government worldwide in environmental management. While existing literature is still unambiguous about roles played by quantity-based versus concentration-based limits in environmental management, it becomes evident that relying exclusively on concentration-based or quantity-based limits to control plant emissions may not necessarily result in improved environmental quality. This paper leverages a unique opportunity arising from a recent reform in China's Pollutant Emission Permit System (PEPS) initiated in 2016 to analyze how the introduction of quantity-based limits in addition to concentration-based limits through the PEPS reform impact emissions at the plant level. Utilizing a unique plant-level continuous emission monitoring system data collected from Shaanxi Province (located in western China), the paper finds a significant reduction in air pollutant emissions as a result of the PEPS reform (nitrogen oxides (NOx) by 39%, sulfur dioxide (SO₂) by 15% and particulate matter (PM) by 13%). The heterogeneity analyses show emission reductions in plants differ across those with varying quantity limits specified in their permits, distinct emission ratios and diverse ownership structures. Furthermore, plants that fall under the classified management system with more stringent regulations imposed, especially those operating in high-pollution sectors, situated within industrial parks, or classified as large-sized plants, attain higher pollutant quantity limits. Findings of the paper carry important implications for effective environmental management, particularly within developing countries, and shed some light on carbon emission reduction policies in China.