How does public policy drive urban energy transition? : evidence from China

Promoting urban energy transition is essential for achieving environmental sustainability, yet how to effectively guide this process through public policy remains a key research question. This study aims to evaluate the effectiveness of government policy in facilitating urban energy transition, with a specific focus on China’s National New Energy Demonstration City Construction (NEDC) Policy. Using a difference-in-differences model with panel data from 274 Chinese cities, the empirical results indicate that the NEDC policy significantly advances urban energy transition, resulting in a notable increase of 0.571 units in the Urban Energy Transition Index and an improvement of 0.0321 units in the Urban Energy Transition Efficiency Index. Mechanism analysis further reveals that the NEDC policy promotes urban energy transition primarily by advancing financial development, strengthening environmental regulations, and encouraging capital-biased technological progress. Heterogeneity analysis indicates that the NEDC policy significantly boosts urban energy transition in resource-based cities, whereas it exerts a suppressive effect on urban energy transition in non-resource-based cities. This study offers valuable policy implications for developing countries seeking sustainable urban transformation.