Green finance as a catalyst for urban net-zero energy transitions

Achieving net-zero emissions in urban energy systems is essential for meeting global climate goals, yet cities often struggle with inadequate financing, uneven technological adoption, and persistent regional disparities. This study addresses these challenges by constructing a comprehensive panel dataset covering 272 Chinese cities from 2006 to 2019. Using a two-step instrumental variable generalized method of moments (2SIV-GMM) approach, we empirically assess the impact of green finance on urban energy transitions toward net-zero emissions. Departing from traditional single-indicator approaches, we develop a multidimensional framework to evaluate city-level energy decarbonization across economic, institutional, and technological dimensions. The results indicate that: (1) green finance significantly accelerates urban net-zero energy transitions; (2) this effect is most potent in large, medium-sized and non-resource-based cities, likely due to more favorable economic structures and institutional conditions; (3) green finance promotes transition pathways through mechanisms such as increased scientific investment, expansion of higher education and digital economy development; (4) local financial market maturity and fiscal capacity serve as critical amplifiers of these positive outcomes. These findings underscore the pivotal role of green finance in supporting sustainable urban energy systems and offer actionable insights for policymakers seeking to design effective, context-specific interventions.