How technology and finance enable urban energy transition: Evidence from China

Urban energy transition is a critical pathway for addressing global climate challenges and breaking fossil fuel dependency. While technology and finance are broadly recognized as fundamental transition drivers, the complex dynamic efficacy of their synergistic integration remains underexplored. This study utilizes panel data from 281 Chinese prefecture-level cities spanning 2003 to 2023 to evaluate the causal impact of the Technology and Finance Point Programs on energy system restructuring. Moving beyond conventional linear evaluations, we employ frontier staggered difference-in-differences and spatial econometric models to capture the nuanced realities of policy implementation. The empirical results demonstrate that tech-finance integration significantly accelerates the transition process by optimizing government science expenditure and advancing industrial upgrading. Addressing gaps in existing literature, our analysis uncovers distinct cohort timing heterogeneity, where earlier policy implementations exhibit stronger, sustained enabling effects due to longer institutional adaptation. Furthermore, quantile estimations reveal a non-linear trend of diminishing marginal utility, providing critical momentum for capital-constrained cities while moderating in advanced regions. Crucially, we identify a severe financial capture phenomenon in resource-dependent cities, where incumbent high‑carbon sectors intercept green financial resources, highlighting a major structural bottleneck in regional transitions. Finally, the policy generates massive spatial multiplier effects, driving synergistic regional energy optimization across administrative boundaries. These findings offer a granular, dynamic framework for tailoring region-specific energy transition policies globally.