Low-Carbon City Pilot Policy and Urban Carbon Productivity: Unveiling the Dual Pathways of Green Innovation and Economic Agglomeration

Abstract

To advance its green and low-carbon transition, China has implemented the Low-Carbon City Pilot Policy (LCCPP) as a strategic initiative. A critical question remains unanswered on whether this policy effectively improves urban carbon productivity and facilitates the decoupling of economic growth from carbon emissions. Using the phased expansion of the LCCPP across Chinese cities as a quasi-natural experiment, this study constructs a multi-period difference-in-differences (DID) model based on a panel dataset of 276 prefecture-level and above cities from 2007 to 2023. The empirical results show that the LCCPP significantly enhances urban carbon productivity in pilot cities relative to non-pilot counterparts. This finding remains robust across a series of sensitivity checks. Mechanism analysis provides suggestive evidence that the policy may operate through two primary channels: fostering green technological innovation and promoting economic agglomeration. Heterogeneity analysis indicates that the policy’s positive effects are more marked in developed cities, innovation-active cities, high-carbon-emission cities, and environmentally prioritized cities. Furthermore, moderation analysis demonstrates that stricter environmental regulations strengthen the policy’s effectiveness. These findings provide empirical evidence for optimizing the design of low-carbon policies and offer actionable insights for tailoring green urban transformation strategies to local conditions.