Does “low-carbon city” accelerate urban innovation? Evidence from China

The “low-carbon city” pilot policy is one of China's essential measures to promote low-carbon development. One of the critical tasks of the policy is to accelerate the innovation and application of low-carbon technologies in pilot cities. Therefore, a quantitative evaluation of the implementation effect of low-carbon city pilot policy is conducive to better promoting low-carbon work in pilot areas. Using a double difference model and the urban innovation index of 268 prefecture-level cities in China from 2001-2018, this study empirically tests the impact of the “low-carbon city” pilot policy on urban innovation and explores its mechanism of action. The results show that the “low-carbon city” pilot policy can induce the overall technological innovation capability of the city to a certain extent and exert a significant impact on utility model patents and green patents. This pilot policy can promote urban innovation by increasing government investment in science and technology and promoting industrial structure upgradation. The heterogeneity analysis shows the significant role of pilot policy in promoting innovation in small, medium and non-provincial capital cities, and cities in high-carbon provinces. This study proposes deepening reforms, optimizing the green financial system, and adapting to local conditions to promote the implementation of the policy.