Evaluating the impact of new energy demonstration city construction on urban air quality: Evidence from a DID analysis of Chinese cities

The study delves into the pivotal role of the New Energy Demonstration City Construction (NEDCC) in fostering clean energy development, with profound implications for urban air quality enhancement. Considering China's context, this study treats the implementation of the NEDCC as a quasi-natural experiment. It utilizes panel data from 285 Chinese cities spanning from 2003 to 2019. By applying a stringent Difference-in-Differences (DID) model, the analysis uncovers a notable 1.972 % decrease in pollution in the pilot cities. This reduction leads to substantial improvements in urban air quality, and it also reveals a combined effect of the NEDCC in reducing carbon dioxide emissions. Mechanism tests underscore how the policy boosts urban air quality through facilitating energy transition, bolstering mass transit systems, and advancements in greening construction pathways. Heterogeneity analyses reveal that cities with limited new energy reserves, abundant resources, elevated pollution levels, and robust information services witness pronounced enhancements in urban air quality under the pilot policy. Furthermore, singular threshold effects of energy consumption intensity and financial development intersect with the NEDCC's influence on urban air quality. Notably, this policy cascades positive spillover effects onto neighboring cities, elevating the air quality across regions. This study underscores the significance of urban green sustainability, emphasizing how NEDCC offers a blueprint for sustainable urban growth and environmental well-being.