Pollution reduction effects of new transregional power transmission systems: Evidence from ultra-high-voltage projects of China

Many countries face challenges due to the geographical mismatch of energy supply and demand. Traditional high-voltage transmission systems have limited capacity to meet the rising need for transregional electricity transfer. China's recently developed ultra-high-voltage (UHV) transmission system presents a promising solution. This study quantifies the pollution reduction effects of UHV transmission using firm-level data on emissions and energy consumption. Employing a staggered difference-in-differences (DID) design that accounts for regional heterogeneity, we find that the operation of UHV lines reduces firms' total SO₂ emissions by 16.8 % on average and emission intensity by 17.1 %. Mechanism analysis indicates that the UHV system provides low-cost and stable electricity, facilitating electrification in power importing areas. It also boosts hydropower generation in power exporting areas, displacing thermal power in power importing areas. Welfare analysis shows that incorporating environmental benefits reduces the investment payback period of UHV projects from 28 years to 5 years at a 2.5 % discount rate. These findings contribute to a comprehensive evaluation of transregional electricity infrastructure, particularly in developing economies where grid modernization is a key energy policy goal.