Environmental regulation and energy efficiency: empirical evidence from the low-carbon city pilot program in China

Abstract

Improvements in energy efficiency will be instrumental in meeting China’s ambitious emission targets while providing adequate energy to support the country’s rising living standards. We investigate whether the low-carbon city pilot (LCCP) program has improved energy efficiency in participating cities. To this end, we analyze prefecture-level data in 249 cities between 2004 and 2016 using the difference-in-differences approach. The findings reveal that the program significantly improved the energy efficiency of pilot cities by promoting technological innovation and restructuring the cities’ industry mix. The positive impacts of the LCCP program on energy efficiency were more pronounced in cities in China’s eastern region and areas lacking natural resources. Furthermore, the program was more effective in cities with high energy consumption and per capita income on the one hand and low foreign direct investment and sulfur dioxide emissions on the other.