Spatial impact of green finance reform pilot zones on environmental efficiency: A pathway to mitigating China's energy trilemma

The energy trilemma is a critical global challenge requiring urgent resolution; however, existing solutions remain inefficient. This study utilizes a detailed environmental input-output indicator system, applying the SBM-DEA model for measurement and incorporating the Spatial Difference-in-Differences (SDID) model to assess the impact of Green Finance Policy (GFP) on environmental efficiency in Chinese cities from 2006 to 2021. The findings demonstrate that GFP significantly enhances environmental efficiency within a 500-km radius, as confirmed by various robustness tests. Mechanism analyses indicate that optimizing industrial structure, reducing energy consumption, advancing green innovation, and strengthening environmental regulations are critical pathways to improving environmental efficiency. Heterogeneity tests further examine the spatial policy effects under different factor endowments. Ultimately, the study concludes that improving environmental efficiency through GFP can alleviate the energy trilemma. This paper highlights the importance of implementing city-specific policies, offering new insights into energy economics, and providing fresh perspectives for policymakers, financial institutions, and enterprises. Despite the study's contributions, future research should further explore the comprehensive effects of GFP on energy, the environment, and the economy to provide more precise and holistic solutions for addressing the energy trilemma.