The role of carbon peaking targets in urban green economic transition: Insights from U.S. city-level climate action plans

Abstract

Carbon peak targets play a crucial role in the global effort to mitigate climate change, with profound implications for green and sustainable economic growth. This research explores the dynamics between carbon peak target policies and urban low-carbon development using a novel delegation-agency framework between central and local governments. Analyzing data from U.S. climate action plans spanning 2010–2020, we employ an advanced difference-in-differences approach to elucidate the causal impact of carbon peak targets on low-carbon transitions. Our findings demonstrate a significant positive correlation between the adoption of these targets and accelerated low-carbon development, with effects modulated by local economic structures, resource availability, and governance transitions. The robustness of these results is rigorously validated through a comprehensive series of tests, including placebo experiments, policy interference controls, and heterogeneity bias assessments. Further investigation reveals that carbon peak targets primarily function through two key mechanisms: stimulating eco-innovation and catalyzing green infrastructure investments. Notably, our analysis uncovers an inverse relationship between target timeline stringency and low-carbon transition effectiveness. This study advances the field by offering a unified theoretical framework for analyzing local government constraints and carbon peak targets, conducting granular city-level analyses, and exploring the nuanced impacts of policy design features. Our findings suggest several policy prescriptions, including recalibrating municipal performance metrics, advocating for flexible target frameworks, and fostering synergies between environmental policies and innovation ecosystems. These insights provide valuable guidance for policymakers aiming to optimize climate strategies and accelerate the transition to a sustainable, low-carbon economy.