China's efforts towards carbon neutrality: Does energy-saving and emission-reduction policy mitigate carbon emissions?

To achieve green and low-carbon development, the Chinese government has selected pilot cities to implement the energy-saving and emission-reduction (ESER) policy in three batches since 2011. So far, there has been no systematic evidence on whether this policy can mitigate carbon emissions. To identify the causal impact of the ESER policy on carbon emissions, we exploit variations in the timing of this policy across cities and assemble a panel dataset of China's 284 cities from 2003 to 2019. Based on a difference-in-differences (DID) framework, we find a relative decline in carbon emissions in pilot cities after the ESER policy implementation, and in particular, this effect follows an increasing trend over time. Our mechanism analysis further corroborates that the carbon-reduction effect of the ESER policy could be achieved through promoting energy-saving effect, optimizing structure effect and strengthening green technique effect. In addition, the observed effect is abundantly heterogeneous in terms of geographic location, environmental constraint, financial self-sufficiency, resource endowment and carbon emissions distribution. Our findings provide empirical evidence from developing countries on the effectiveness of carbon-reduction policy, which demonstrates China's determination to achieve its two climate goals (carbon peaking by 2030 and carbon neutrality by 2060).