Environmental protection tax and green total-factor energy efficiency: From the perspective of dual mediation and dual moderation

• Explore the impact of environmental protection tax (EPT) on green total-factor energy efficiency (GTFEE). • Integrate a theoretical framework of macro–micro dual pathways and government-public dual participation. • The implementation of EPT can significantly improve GTFEE. • EPT enhances GTFEE through industrial agglomeration and green innovation at macro and micro level. • The government finance and public concern play moderating roles between EPT and GTFEE. Enhancing energy efficiency is essential for promoting urban green transformation to achieve high-quality development. The Environmental Protection Tax (EPT) Law implemented in 2018, as a market-incentivized environmental regulation, establishes new institutional conditions to effectively tackle the dual challenges of energy and environmental issues, while improving green total-factor energy efficiency (GTFEE). However, the relationship between the two remains underexplored. Based on this, this study constructs a comprehensive theoretical framework of macro–micro dual pathways and government-public dual participation. Then, using the panel data of 282 Chinese cities spanning 2011 to 2023, it regards the implementation of EPT as a quasi-natural experiment, and applies the difference-in-differences (DID) model to compare the impact of EPT on GTFEE before and after 2018, thereby empirically analyzing the policy’s effect on GTFEE. Additionally, it explores the mediating and moderating roles in the relationship between EPT and GTFEE, while analyzing the heterogeneity facilitation relationship in cities with different characteristic, leading to the following conclusions. First, EPT can significantly improve GTFEE considering several robustness tests. Second, from the perspective of mediating mechanisms, EPT enhances GTFEE through industrial agglomeration at the macro level and green innovation at the micro level. Third, from the perspective of moderating effect, the financial intervention weakens the positive influence of EPT and GTFEE, while the public environmental concern strengthens the positive influence of EPT and GTFEE. Fourth, the examination of heterogeneity reveals that the promoting effect of EPT on GTFEE is larger in non-resource-based cities and old industrial base cities than in resource-based cities and non-old industrial base cities. These findings clarify the multi-dimensional action mechanism of EPT on GTFEE, and emphasize the critical roles of environmental policies, industrial agglomeration, green innovation, government functions, and public concern in improving GTFEE.