Does the new energy demonstration cities construction reduce CO2 emission? Evidence from a quasi-natural experiment in China

Based on the panel data of 279 cities in China from 2003 to 2017, this paper regards the new energy demonstration cities (NEDC) construction as a quasi-natural experiment, using the double-fixed effect model and the difference-in-differences (DID) method to test its local carbon emission reduction effect and transmission mechanisms and further explores the impact of NEDC on neighboring carbon emissions. Results show that (1) NEDC reduces carbon emission intensity and per capita carbon emission significantly and shows dynamic sustainability. The policy effect has shown a trend of increasing year by year. Moreover, there is significant heterogeneity in the carbon emission reduction effect of NEDC, which produces more significant policy effect in large-scale and non-resource-based cities. (2) NEDC construction reduces carbon emission through green technology innovation effect, innovative elements agglomeration effect, and total factor productivity improvement effect. In terms of the contribution of reducing carbon emission intensity and per capita carbon emission, total factor productivity accounts for 36.7% and 21.5%, respectively, green technology innovation accounts for 18.6% and 23.9%, respectively, the contribution of R&D personnel agglomeration is 7.5% and 8.3%, respectively, and the contribution of R&D capital agglomeration is 5.9% and 9.5%, respectively. (3) From the perspective of spatial effect, the impact of NEDC on carbon emissions presents a "siphon" effect; that is, although NEDC reduces local carbon emissions, it has produced the phenomenon of transfer to neighboring areas, accelerating the increase in the carbon emission intensity of neighboring areas.