Innovation-Oriented Urban Policies and Energy Efficiency: Mechanisms, Spatial Spillovers, and Policy Insights

Enhancing urban energy efficiency is central to low-carbon transition and broader urban sustainability. However, whether innovation-oriented urban policy can generate such gains, through which channels it operates, and whether its effects extend beyond pilot cities remain insufficiently understood. Focusing on China’s Innovative City Pilot (ICP) program, this study uses panel data for 274 Chinese cities from 2006 to 2022 and treats the staggered implementation of the program as a quasi-natural experiment. A multi-period difference-in-differences model is employed to examine the impact of the ICP program on urban energy efficiency. The results show that the ICP program significantly improves urban energy efficiency, and this conclusion remains robust across a series of robustness checks. Mechanism analysis further suggests that the policy effect operates through lower per capita carbon emissions and stronger green technological innovation. Heterogeneity analysis shows that the effect is more pronounced in larger cities, economically more developed cities, and cities with stronger pre-existing innovation capacity. Spatial analysis indicates that the program generates not only significant local benefits but also positive spillover effects on neighboring cities. Overall, these findings suggest that innovation-oriented urban policies can promote energy-efficient, low-carbon, and more sustainable urban development, while highlighting the importance of regional coordination and local innovation capacity in shaping policy effectiveness.