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Does climate policy uncertainty (CPU) hinder carbon reduction? Evidence using the city-level CPU index in China

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  • Li, Rui
  • Fang, Debin
  • Xu, Jiajun

Abstract

In this study, we explore the effects of climate policy uncertainty (CPU) on carbon emissions in 283 Chinese cities while controlling for low-carbon policy intensity. We address the potential endogeneity issue by controlling for predetermined variables and employing propensity score matching alongside the two-stage least squares method. The results indicate that CPU may hinder China's urban carbon reduction process by constraining structural transformation, inhibiting technological innovation, and reducing low-carbon consumption awareness. The impact of CPU is more pronounced in cities with higher marketization, weaker policy intensity, and resource-based industries. Furthermore, CPU exhibits spatial spillovers, increasing emissions in both local and neighboring cities. This study provides valuable insights for designing stable, effective, and targeted climate policies at local and regional levels.

Suggested Citation

  • Li, Rui & Fang, Debin & Xu, Jiajun, 2025. "Does climate policy uncertainty (CPU) hinder carbon reduction? Evidence using the city-level CPU index in China," Energy Economics, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:eneeco:v:141:y:2025:i:c:s0140988324008077
    DOI: 10.1016/j.eneco.2024.108098
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