How does urban agglomeration contribute to achieving carbon reduction targets? Evidence from an HSR-weighting spatial DID approach

Urban agglomeration (UA), as a model of regional integration, provides a platform for advancing sustainable urban development and carbon emission reduction. Treating the urban agglomeration implementation in China as a quasi-natural experiment, we use the high-speed rail (HSR)-weighting spatial difference-in-differences (SDID) method to examine both the direct and indirect effects of UA on carbon emission reduction. Using a balanced panel data set of 195 cities from 2004 to 2019 in China, our empirical results show that UA directly impacts carbon emission abatement in core cities and indirectly affects neighboring cities through inter-city HSR connections. Furthermore, the mechanism analysis suggests that: (1) UA reduces carbon emissions by upgrading industrial structures, generating a “borrowed-size” effect that promotes structural optimization and reduces carbon emissions in neighboring cities; (2) UA reduces carbon emissions by decreasing energy intensity, but the resulting siphon effect increases energy consumption in neighboring cities; (3) UA promotes local carbon emission reduction by stimulating technological innovation and diversification agglomeration, but does not influence carbon emissions in neighboring cities through these mechanisms. These findings provide useful insights into how UA and inter-city HSR facilitate the transition towards a low-carbon society.