Influence of air quality ranking on China's energy efficiency: spatial difference-in-differences model with multiple time periods.

Abstract

Exploring the impact of air quality ranking on energy efficiency and its spatial spillovers will help improve the pollution and carbon reduction effects of environmental governance policies. Based on the panel data of 285 cities at or above prefecture level in China during 2009-2019, this study pioneers in adopting difference-in-differences (DID) model with multiple time periods, spatial DID (SDID) model with multiple time periods, and mediating effect to explore the direct influence of ranking on China's energy efficiency, as well as its spatial effect and influence mechanism. Results show that air quality ranking is of significant positive impact on energy efficiency, proved by parallel trend hypothesis, placebo control, and policy heterogeneity. With spatial effect considered, such impact still exists, and ranking of the experimental group has significant positive spatial spillover effect on efficiency of the control group, meaning the ranking also promotes the efficiency of nearby cities in control groups via spatial spillover effect. In addition, air quality ranking greatly elevates energy efficiency via industrial structure and technological innovation, the mechanism of which is of significant positive spatial spillover effect. Based on the above results, some policy recommendations on environmental competition policy, industrial structure adjustment, and low-carbon applicable technology promotion were proposed to promote the energy efficiency of China.