Leverage effect or crowding out effect? Evidence from low-carbon city pilot and energy technology innovation in China

Energy technology composed of renewable and fossil energy is not entirely beneficial to the environment. Consequently, we believe that the direction of energy technology innovation should be clean to achieve sustainable development. This paper takes the low-carbon city pilot as a quasi-natural experiment, employs the difference-in-difference method and the energy technology patent data with A-share listed enterprises in Shanghai and Shenzhen from 2007 to 2019 to explore the incentive effect, mechanism, and heterogeneity of lowcarbon city pilot on the direction of energy technology innovation. We found that (1) the low-carbon city pilot has an incentive effect on the direction of energy technology innovation by promoting renewable energy technology, which indicates that the clean direction of energy technology innovation is taking shape. (2) The incentive effect of low-carbon city pilot on energy technology innovation is not the leverage effect superimposed on the established innovation activities of enterprises, but the crowding out effect on other technological innovation. This means that the pilot policy is suspected of negatively the productivity of enterprises. (3) The quality of energy technology innovation has not been stimulated, renewable energy technologies that are easy to generate high economic benefits are favored by enterprises, and environmental information disclosure profits to improve the policy effect of low-carbon city pilot. This study provides implications for the effective implementation of environmental policy and the synergistic of renewable and fossil energy technologies.