Twin goals, one policy: Cost-effective collaborative abatement via new energy cities

Abstract

New energy measures have been identified as a crucial strategy for most developing countries to address climate concerns and environmental risks. Despite multitude studies documenting the desirable clean air and low-carbon outcomes brought by new energy consumption, little is known about whether and how it facilitates the cost-effective collaborative emission abatement (CCEA). Therefore, we first propose a new method based on the data envelopment analysis (DEA) framework to measure the CCEA of 283 prefecture-level and above cities in China. Subsequently, we establish the causality exploiting the enforcement of the new energy model city construction program (NEMCC) as an ideal quasi-natural experiment. We find that the policy significantly alleviates the emission abatement cost burden on the real economy caused by the collaborative process of pollution mitigation and carbon reduction. Moreover, we uncover three plausible channels in which the NEMCC nudges the CCEA from the entire production process of “source prevention-process control-end treatment”. Furthermore, we demonstrate that the beneficial effect is more prominent in southern cities, and cities with superior human capital and stringent environmental regulation. Additionally, we demonstrate that digital economy positively facilitates the policy effect with more complete intellectual property protection and active innovation environment within the city. Overall, the study provides fresh evidence supporting that new energy measures and initiatives could play a cost-effective hand in pursuing multi-objective climate and environmental governance.