Can the new energy demonstration city policy promote corporate green innovation capability?

New energy demonstration city (NEDC) projects are significantly driving changes in energy structures and sustainable economic development. Corporate green technology innovation is key to achieving an alternative to our current energy use. To explore whether the NEDC project can help to improve companies' green innovation capabilities, this paper presents the dual differential model (DID) to conduct empirical research on panel data in 285 prefecture-level and above cities in China from 2008 to 2020. The DID model is arguably the most adequate for addressing the issue of endogenous problems. The research shows that the NEDC project has improved corporate green innovation capability; the findings of mechanism analysis show that NEDC projects have incited an upgrading of the local urban industrial structure and thereby improved corporate green innovation. The policy effect of NEDC projects obviously shows “insufficient momentum”; the heterogeneity test found that the promotion effect of NEDC projects for corporate green innovation in eastern cities, major cities, large-scale companies and energy-dependent industries is more significant. Based on the conclusions and heterogeneous characteristics for promoting corporate green innovation capability, the government should roll out further NEDC projects in a systematic way and more closely monitor the quality of such new energy demonstration cities.