Analysis of how green fiscal policy reduces urban carbon emissions by 23.3% in cities, suggesting wider implications for environmental governance.
Urban carbon reduction is instrumental in enabling cities to realize their developmental sustainability objectives. However, regional disparities in economic development pose significant challenges to low-carbon transitions. This study utilizes panel data from 282 cities in China spanning 2006–2021, considering the energy saving and emission reduction (ESER) fiscal policy as an external shock. Using a multi-period difference-in-differences approach, we assess how ESER impacts urban carbon emissions. Our findings indicate that ESER significantly reduces municipal carbon emissions by an average of 23.3% compared to non-pilot cities. Mechanism analyses suggest that this effect operates through reduced energy consumption, improved industrial structure, and enhanced green innovation. ESER’s impact exhibits heterogeneity across cities with different levels of economic development, population size, innovation capacity, and industrial composition. Moreover, we find evidence of spatial spillover effects, as ESER benefits extend to neighboring regions. These results confirm the effectiveness of ESER in promoting low-carbon development and offer practical implications for enhancing environmental governance through green fiscal instruments.
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Luo et al. (2025) studied this question.
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