Evaluating the impact of new energy vehicle subsidies on urban carbon emissions: Evidence from 261 Chinese cities

Given the important challenge of achieving full decarbonization in the transportation sector, it is critical to explore the potential of public policy in reducing its carbon emissions. Using city-level data for China from 2006 to 2016, this study assesses the impact of new energy vehicle subsidy policies (NEVSP) on urban carbon emissions by applying a difference-in-differences approach. The study finds that the implementation of NEVSP resulted in at least a 4.9 % reduction in the city's carbon emissions. Also, this effect shows significant heterogeneity depending on regional endowments. The emission-reducing effects of the subsidy are more pronounced in cities characterized by advanced innovation in NEVs technology, high energy consumption, and higher levels of education. These findings provide strong empirical evidence of the positive environmental impact of NEVSP. Additionally, the above results provide important insights for relevant authorities to adjust the intensity and scope of NEVSP based on local conditions, particularly energy consumption, R&D levels, and public awareness, to effectively reduce urban carbon emissions.