Can the New Energy Demonstration City Policy Promote Green and Low-Carbon Development? Evidence from China

Developing new energy is critical to China’s green and low-carbon development. Therefore, in 2014, the Chinese government promulgated a vital innovation policy, namely, the New Energy Demonstration City Policy (NEDCP), which is expected to reduce energy consumption and carbon emissions in Chinese cities. Is the NEDCP facilitating green and low-carbon development in China, and if so, how? Based on unbalanced panel data from 2003 to 2017 at the city level in China, in this study we evaluate the impact of the NEDCP on green and low-carbon development using the staggered difference-in-differences (DID) method. We find that the NEDCP can significantly contribute to green and low-carbon development in China. After various robustness tests, our results are still valid. According to the heterogeneity analysis, non-resource and non-old industrial-base cities have a greater positive impact from this policy. The mechanism analysis denotes that the positive policy effect works by upgrading the industrial structure and stimulating urban innovation. The substantial empirical evidence presented in this paper supports the continued promotion and implementation of new-energy demonstration cities.