Pilot policies for low-carbon cities in China: a study of the impact on green finance development and energy carbon efficiency

Improving the efficiency of energy carbon emissions (ECEE) is crucial for China's pursuit of high-quality development. This paper assesses the low-carbon city pilot policy (LCCPP) as a strategic measure to enhance ECEE and its alignment with global efforts to mitigate climate change. By analyzing panel data from 205 Chinese cities from 2003 to 2016, this study evaluates the LCCPP's effectiveness and its spatial spillover effects on ECEE. Results indicate a 6.5% increase in ECEE in pilot cities compared to non-pilot counterparts, with these findings substantiated through extensive robustness checks. The analysis of underlying mechanisms reveals that the LCCPP boosts ECEE by promoting green finance and the co-agglomeration of producer services and manufacturing. Furthermore, the policy's impact varies: it is more substantial in non-resource-based cities and in those with advanced green finance and synergistic industry agglomerations. Employing a spatial difference-in-differences approach, the study uncovers an inverted U-shaped pattern in the spillover effects of the LCCPP on ECEE, suggesting a nuanced regional influence of the policy. This research contributes to the understanding of policy-driven environmental improvements and their economic co-benefits within urban settings.Key Policy InsightsThis research provides policy implications for readjusting low-carbon city pilot policies (LCCPP) to unleash institutional dividends in promoting green development and addressing climate change.The significant increase in energy efficiency caused by the LCCPP highlights the critical role of policy interventions in China’s green transformation.The differentiated impacts of LCCPP on cities with varying characteristics underscore the necessity for policy design and implementation to be cognizant of urban attributes such as whether the city is resource-based, the level of green finance development, and the level of synergistic agglomeration between producer services and manufacturing.This offers policymakers valuable insights into how financial instruments and industrial strategies can be leveraged to support low-carbon development.The LCCPP’s impact on ECEE follows an inverted U-shape, initially boosting efficiency but diminishing with increased policy intensity or over time.