From central directives to local actions: The effect of China's climate policy on urban diversification of green technologies

The low-carbon city pilot (LCCP) policy in China, combining central government design with local government action, aims to foster green innovation and improve climate outcomes. This study evaluates the policy's effect on green technological diversification in pilot cities, with attention to characteristics of local technological portfolios and selection modes of pilot cities. Our findings reveal that the LCCP policy, rather than technological relatedness, plays the dominant role in driving the entry of low-quality green technologies. Specifically, this policy enhances the related diversification of low-quality green technologies and, more importantly, encourages their unrelated diversification, the latter of which drives path-breaking development in pilot cities. Interaction analysis shows that the policy's effect on unrelated diversification is amplified in cities with higher economic levels, whereas city size has no influence. When considering differences in pilot selection modes, the policy's effect on unrelated diversification is valid only in cities selected through local government self-declaration. Conversely, in cities directly designated by the central government, the policy fails to encourage unrelated diversification and even hinders the related diversification of high-quality green technologies. • We study the effect of China's climate policy on urban diversification of green technologies • The policy's effect on unrelated diversification is amplified in cities with higher economic levels, whereas city size has no influence • The policy's effect on unrelated diversification is valid only in cities selected through local government self-declaration