Can “energy-saving and emission reduction” demonstration city pilot alleviate carbon inequality in Chinese cities?

Abstract As a pivotal element in China’s pursuit of a sustainable development model, green fiscal policies have become increasingly important amid the exacerbation of global climate conditions. Regrettably, little attention has been paid to comprehending the carbon allocation effects of the implementation of these policies. This study focuses on the “National Comprehensive Demonstration City of Energy Saving and Emission Reduction Fiscal Policy” (ESER policy) as the focal point of analysis. Using a multi-period difference-in-differences model, we assessed the implications of ESER policies on carbon inequality. This study further explored asymmetry, mechanism effects, and heterogeneity. Our empirical findings demonstrate that the ESER policy directly reduced carbon inequality by 11.4% in the demonstration cities. This conclusion withstood rigorous testing, including parallel trend assessments, robustness analyses, and endogeneity diagnostics. Moreover, the ameliorative implications of the ESER policy on carbon inequality in demonstration cities are predominantly realized by facilitating cleaner production technological innovation, end-of-pipe treatment technological innovation, industrial structure rationalization, and industrial structure optimization. Furthermore, the ameliorative implications of the ESER policy on carbon inequality were conspicuous in the upper quantiles. Finally, the urban magnitude, geographical location, resource endowment, and innovation foundation of a demonstration city exert diverse influences on policy implementation. These empirical results provide valuable guidance for the Chinese government in formulating climate policies with a focus on carbon equity considerations.