Energy transition in China: Is there a role for climate policy uncertainty?

In exploring strategies to address global climate change and achieve carbon neutrality goals, climate policy uncertainty (CPU) has become a significant challenge that cannot be ignored. It is crucial to understand how regions can effectively respond to climate risks and achieve energy transition. In this context, we utilized panel data from 277 Chinese cities and employed fixed effects models to analyze the relationship and mechanism between Chinese climate policy uncertainty (CCPU) and energy transition (ET). Our study found that CCPU significantly hinders the progress of ET, and this impact exhibits asymmetric characteristics. Compared to regions with strong environmental regulations, limited fiscal decentralization, and higher administrative levels, CCPU has a more pronounced inhibitory effect on ET in regions with weak environmental regulations, significant fiscal decentralization, and lower administrative levels. Green finance and energy structure are identified as important channels through which CCPU reduces ET. Additionally, further analysis indicates that CCPU significantly suppresses regional high-quality economic development and innovation, and this impact is achieved through inhibiting ET. Therefore, in the face of external uncertainties, this research can provide insights for local climate policy formulation. Focusing on and striving to reduce CCPU will contribute to the development of ET in regions.