Can Climate Investment and Financing Pilots Promote Urban Green Transformation? Evidence from a Quasi-Natural Experiment in China

Promoting urban green and low-carbon transformation is essential for achieving carbon peaking and carbon neutrality, yet cities continue to face financing constraints, insufficient project identification, and weak incentives for green innovation. This study treats China’s climate investment and financing pilot program as a quasi-natural experiment. It uses panel data for 242 prefecture-level and above cities from 2016 to 2023 to estimate its effect on urban green transformation with a difference-in-differences (DID) specification The results show that the pilot significantly promotes urban green transformation, and the policy effect is stronger in coastal cities, large and medium-sized cities, major urban agglomerations, and non-resource-based cities. Mechanism analysis shows that the pilot promotes urban green transformation by increasing local governments’ focus on carbon reduction, advancing green finance development, and stimulating green technological innovation. These findings support improving pilot evaluation and implementation, strengthening climate-project development and green financial instruments, and tailoring policy support to local conditions.