Working Paper

Cost-benefit assessment of proposed China 6 emission standard for new light-duty vehicles

In May 2016, the Chinese Ministry of Environmental Protection (MEP) released a proposal, “Limits and Measurement Methods for Emissions from Light-Duty Vehicles (LDVs),” also known as the China 6 emission standard for new LDVs (referred to hereafter as the proposed standard or China 6 standard proposal; China MEP, 2016). The proposed standard is a major upgrade to previous standards in China, with integration of best practices from the latest emission regulations in the United States, the State of California, and the European Union.

This paper estimates health benefits and technology upgrade costs of the proposed standard and implementation timetable. The research focuses mainly on nationwide impacts but also separately analyzes China’s three key regions: the so-called Jing-Jin-Ji (or JJJ) region (agglomeration surrounding the capital, including Beijing, Tianjin, and Hebei province); the Yangtze River delta (or YRD) region (including Shanghai, Jiangsu, and Zhejiang provinces); and Guangdong province.

The proposed standard is among the world’s most stringent and combines best practices from both European and U.S. regulations including tightened emission limits of regulated ambient air pollutants, as well as provisions that enable better emission compliance of vehicles in real-world driving conditions. It is expected to help reduce emissions from four major ambient air pollutants—CO, HC, NOX, and PM—by approximately 3,396, 4,184, 1,001, and 26 thousand metric tons, respectively, in 2030. These emission reductions would help decrease the national annual average PM2.5 and ground- level ozone pollution concentrations by 1.1 μg/m3 and 2.1 ppb, respectively, in 2030. The improved air quality would curtail the incidence of premature mortality caused by PM2.5 and ground-level ozone exposure in urban areas. As a result, a total of 21,754 premature deaths and 28,559 hospital admissions would be avoided in 2030. The total health benefits from implementing the proposed standard are valued at USD 42.4 billion (CNY 284.3 billion) at a technology upgrade cost of USD 4.8 billion (CNY 31.8 billion) in 2030, with a benefit-to-cost ratio of 8.9:1 and annual net benefit of USD 37.7 billion (CNY 252.4 billion), indicating that it is a very cost-effective standard.