Why incentive-regulatory policy synergy underperforms in driving energy transition: Evidence from China

Abstract

• “Incentive-regulatory” policy synergy promotes energy transition but falls short of “1 + 1 > 2” expectations. • policy synergy’s marginal effect is lower than standalone incentive policy due to institutional conflicts. • Transmission mechanisms (industrial/financial/cognitive) exhibit significant attenuation under policy synergy. • policy synergy effectiveness hinges on city attributes: stronger in high-capacity, non-resource-dependent cities. • Top-down institutional integration is critical to resolve “instrumental tension” in multi-policy governance. Accelerating the energy transition (ET) is essential for achieving climate goals, yet the effectiveness of combining multiple policy instruments remains uncertain. This study investigates the synergistic effects of China’s New Energy Demonstration Cities (incentive policy) and Key Air Pollution Control Zones (regulatory policy) on urban ET from 2011 to 2021. A multidimensional ET index is constructed under the “energy trilemma” framework, and a double machine learning approach is employed to identify causal impacts and mediating mechanisms. The results show that: (1) policy synergy significantly promotes ET, but its marginal effect is lower than that of the incentive policy alone, failing to achieve the expected “1 + 1 > 2” outcome; (2) Heterogeneity analysis reveals that the synergy effect is more pronounced in cities with stronger economic foundations, higher fiscal decentralization, non-resource dependency, and non-old industrial base status, highlighting the role of local institutional carrying capacity; (3) Mechanism analysis further indicates that synergy promotes ET mainly through industrial upgrading, green finance, and public environmental awareness, but all pathways suffer from transmission attenuation. These findings underscore the challenges of fragmented governance in multi-policy environments and suggest that effective energy transition requires stronger institutional integration, clearer policy signals, and enhanced local implementation capacity.