The rapid development of digital finance has delivered significant benefits, such as sustainable development and economic growth. We explore the relationship between digital finance and green total factor energy efficiency (GTFEE) for the first time, filling a gap in the existing literature. This paper uses dynamic panel models to explore digital finance’s impact on GTFEE at the Chinese city-level panel data from 2011 to 2018. The results show that digital finance can significantly improve urban GTFEE, and the findings remain robust with various tests. Second, the mechanism analysis indicates that digital finance can improve GTFEE by promoting urban green technology innovation and industrial structure upgrading. Further study shows that digital finance has a better effect on the improvement of GTFEE in central and western cities, small cities and non-resource-based cities, but has no significant or small impact on GTFEE in eastern cities, large cities and resource-based cities, reflecting the inclusiveness of digital finance.

In the pursuit of China’s environmental targets to achieve a carbon peak by 2030 and carbon neutrality by 2060, the carbon emission trading scheme (CETs) has emerged as a critical policy instrument. Since the 14th Five-Year Plan, China has been on a two-wheel drive to prevent pollution and combat climate change and proposes to fight the Blue Sky Defense. Therefore, this study focuses on prefecture-level cities in China and employs a spatial difference-difference (SDID) model to investigate the spatial spillover effects of CETs on urban total factor carbon emission efficiency (TFCEE). Furthermore, a mediating effect model is constructed to explore the channels through which CETs influence carbon emission efficiency. The results show that (1) implementing urban CETs can significantly improve urban itself and the surrounding carbon emission efficiency. (2) The CETs can indirectly promote the improvement of carbon efficiency by optimizing the allocation of labor resources and strengthening the level of green technology innovation. (3) Compared with the cities in central and western China, implementing the CETs has a stronger promotion effect on the carbon emission efficiency of the cities in eastern China.

China, the world’s largest carbon emitter, urgently needs to improve its carbon emissions efficiency. This study analyzes the impact of tax policy on total factor carbon emission efficiency (TFCEE). Using the Value Added Tax (VAT) reform in China as an exogenous shock and undesirable-SBM model to measure the total factor carbon emission efficiency of 282 cities in China from 2003 to 2019, our multiple difference-in-difference (DID) estimates show that VAT reform significantly improves the TFCEE in the city level. These potential mechanisms show that VAT reform has promoted upgrading industrial structures, stimulated technological innovation, improved human capital, introduced FDI through four channels, and enhanced the TFCEE. The heterogeneity study found that VAT reform has a higher effect on promoting TFCEE in coastal and large megacities than in inland and small and medium-sized cities. This study provides a theoretical basis for policy instruments to improve energy efficiency and the environment.

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