The energy-saving effect of green fiscal policy: Empirical evidence from China's comprehensive demonstration cities of energy conservation and emission reduction fiscal policy

Yicheng Zhou and Boqiang Lin ()

Applied Energy, 2025, vol. 378, issue PA, No S0306261924021676

Abstract: Fiscal policy is a crucial tool to achieve energy conservation and emission reduction (ECER), and can provide necessary fiscal support for the green economic transformation. This paper systematically discusses the influencing mechanism of green fiscal policy (GFP) on electricity consumption, and then constructs a time-varying difference-in-difference (DID) model based on the quasi-natural experiment of comprehensive demonstration cities of energy conservation and emission reduction fiscal policy (ECERFP), and empirically tests the relationship between GFP and urban electricity consumption by combining urban panel data. The results show that ECERFP can not only significantly reduce urban electricity consumption directly, but also reduce urban electricity consumption through industrial structure upgrading, public transportation development and green technological innovation. Meanwhile, economic growth targets and fiscal decentralization can regulate the energy-saving effect of ECERFP. Specifically, fiscal decentralization can enhance the energy-saving effect of ECERFP, but the economic growth targets are not conducive to exerting the energy-saving effect of ECERFP. More importantly, there is the urban heterogeneity impact of ECERFP on urban electricity consumption. In the east, west, big cities and developed cities, the energy-saving effect of ECERFP is more obvious. In addition, ECERFP can reduce electricity consumption not only in the industrial sector, but also in the household sector. The findings present empirical evidence for the application of GFP in ECER.

Keywords: Green fiscal policy; Comprehensive demonstration cities of energy conservation and emission reduction fiscal policy; Electricity consumption; Time-varying difference-in-differences (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2024.124784

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