Impact of climate policy uncertainty on urban carbon emissions: Empirical evidence from China

The effect of climate policy on carbon emissions has been widely analyzed; however, the literature on climate policy uncertainty (CPU) is limited. We used panel data from 281 Chinese cities from 2006 to 2022 to construct a fixed effects model that examines the causal relationship between CPU and carbon emissions (CE). The results reveal that CPU significantly increases urban CE and the potential mechanisms lie in two aspects: increasing urban energy consumption on the demand side and inhibiting urban green innovation on the supply side. The moderating effect indicates that the emissions trading scheme pilot policy mitigates the carbon-increasing effect. Additionally, the heterogeneity analysis reveals that CPU strongly affects CE in southeastern coastal cities, cities with lower administrative levels, large cities, and non-resource-based cities. Our findings provide novel insights for policymakers in designing flexible climate policies to address climate challenges and promote sustainable development.