We analyzed the impacts of incorporating local air quality improvement and environmental co-benefits into the climate policy and mitigation technology assessment of the cement sector in China. Local air quality can benefit from reducing greenhouse gas emissions, which consequently lowers abatement costs and strengthens the cost-effectiveness of mitigation technologies. We used a simplified approach to estimate environmental damage factors due to air pollution at the sub-national level in China. The calculated economic costs of environmental damage due to PM10, NOx, and SO2 were 7,714 $/t, 1,006 $/t, and 902 $/t, respectively. These values vary among the provinces. We found that most energy-saving technologies in the cement industry will create significant co-benefits, ranging from 3 $/t CO2 to 39 $/t CO2 at the national level; however, a tradeoff for carbon capture and storage (CCS) and energy-saving technologies also resulted with increased electricity consumption. Large spatial variations of co-benefits can be gained at the sub-national level and justify the enactment of more stringent climate policies in the wealthier regions in China. (C) 2013 Elsevier Ltd. All rights reserved.