The Impact of the Industrial and Financial Cooperation Pilot on Urban Energy Transition: A Difference-in-Differences Approach

Abstract

One of the important measures to support green transformation of industry and improve the real economy of financial services is to carry out a pilot program Industrial and Financial Cooperation Policies. This study employs a multi-period difference-in-differences (DID) approach for evaluating the impact of a pilot policy on urban sulfur dioxide (SO₂) emission intensity, based on panel data from 112 Chinese cities over the period 2014–2022.Controlling for both city and year fixed effects, our findings reveal that the pilot policy significantly increases the SO₂ emission intensity of treated cities, indicating that the policy fails to achieve its intended emission reduction. Robustness checks, including winsorization to mitigate the influence of outliers and the exclusion of municipalities from the sample, consistently confirm that the previously estimated effect remains statistically significant. An expansion of the industrial sector is indicated by mechanism analysis, which reveals that the policy considerably increases share of the secondary sector in GDP. The main cause of the rise in emission intensity is this structural change. According to heterogeneity analysis, the policy effect is statistically minor in resource-based cities and mostly concentrated in non-resource-based cities. Additionally, because treated cities have a larger patent base, even while the strategy increases total green patent applications, the proportional growth rate is less than that of the control group. In resource-based cities, the impact of green innovation is likewise negligible. This study provides empirical evidence for improving green finance policies by showing how Industrial and Financial Cooperation Policies may produce short-term environmental rebound effects by promoting industrial expansion.