Impact of China's Low-Carbon City Pilot Policies on Enterprise Energy Efficiency

An increase in energy efficiency is an essential element and a powerful driving force for the in-depth implementation of the sustainable development strategies necessary in accelerating the promotion of green, circular, and low-carbon development, as well as to promote the comprehensive green transformation of economic and social development. An important question with regard to this paper is thus: can the low-carbon city pilot policy promote energy efficiency improvement, and if so, through what mechanisms? This paper uses the SBM-Malmquist-Luenberger index method to measure the green total factor energy efficiency and examines the impact and pathways of the pilot policy on the energy efficiency of enterprises, using a sample of listed manufacturing enterprises in 230 prefecture-level cities in China from 2007 to 2020. Additionally, the time-varying difference-in-differences (DID) method is approached in this paper. After replacing energy efficiency with slack-based measure directional distance function model (SBM-DDF) and conducting a series of robustness tests, this study found that the pilot policy can significantly improve the energy efficiency of manufacturing enterprises. A mechanism test shows that this policy can promote green innovation effect and agglomeration effect to improve enterprises' energy efficiency. The low-carbon city pilot policy has contributed the most to energy efficiency through enterprise investment in green innovation and manufacturing agglomeration. Heterogeneity analysis found that policy effect differs among firms in terms of different sizes and properties, and the pilot policy plays different roles among different regions. This paper provides firm-level theoretical support and empirical evidence for evaluating low-carbon city pilot policy and offers policy recommendations.