Crafting the perfect policy combination: Exploring the synergistic effects of dual-pilot energy policies on urban carbon emission efficiency

Abstract

Energy policy constitutes a critical instrument for environmental governance. Exploring the synergistic effects of government-led and market-incentivized energy policies, focusing on energy transition, is crucial for improving urban carbon emission efficiency. Based on panel data from 279 China's cities from 2006 to 2021, this study treats the dual-pilot policies of new energy demonstration city and energy-consuming rights trading system as a quasi-natural experiment, employing a Difference-in-Differences (DID) model to assess the policy effects of the dual-pilot energy policies (DPEPs) on urban carbon emission efficiency. The results show that DPEPs significantly enhance urban carbon emission efficiency, and compared to the single-pilot policy, DPEPs exhibit a more pronounced policy effect. These findings hold robust after multiple robustness checks. Mechanism analysis reveals that DPEPs improve urban carbon emission efficiency by optimizing industrial structure, enhancing energy efficiency, and promoting regional technological advancement. Heterogeneity analysis shows that the synergistic effect of DPEPs is related to geographical location, industrialization and economic level, with policy effects being more pronounced in cities located in the central and western regions and highly industrialized and economic development cities. In further analysis, this paper employs the spatial DID model to evaluate the spatial spillover effects of DPEPs, finding that the implementation of DPEPs significantly boosts the carbon emission efficiency of surrounding areas. This study has important implications for pilot cities integrating multiple energy policy combinations and accelerating urban low-carbon transformation.