Does the new energy vehicles subsidy policy decrease the carbon emissions of the urban transport industry? Evidence from Chinese cities in Yangtze River Delta

New energy vehicles (NEV) have become an important driving force for carbon reduction in the transportation industry. This paper adopts the extended environmental pressure assessment (STIRPAT) model and the time-varying difference in differences (DID) model to evaluate the effectiveness of the NEV subsidy policy to achieve sustainable governance. The results show that the NEV subsidy policy can significantly decrease the carbon emission of the transport industry. The mechanism analysis results indicate that the NEV subsidy policy can decrease carbon emissions by promoting a green transformation of the consumer car purchasing structure. Further analysis found that a “fraudulent subsidy” can significantly weaken the policy effect of subsidies. The results of heterogeneity analysis indicate that the subsidy policies introduced by different levels of government have different effects. The subsidy policy of the central government has a more significant effect, and repeated subsidies from central and local governments will weaken the policy's effectiveness. These findings provide valuable insights for policymakers in developing countries to optimize subsidies for new energy vehicles in reducing carbon emissions in the transportation industry.