To achieve carbon peak and neutrality goals and promote sustainable development, the power sector, as China’s largest source of carbon emissions, is the first industry to implement the national carbon emission trading scheme (ETS). A differences-in-differences model is employed on firm-level data to assess the causal impact of China’s national ETS, launched in 2017, on the sustainable technology progress of power generation enterprises. This study employs green patents and total factor productivity as measures for sustainable technology progress and then explores mechanisms and heterogeneity of the impact. Results show that: (1) The national ETS has a positive effect on green innovation capability and efficiency in the power industry, and the increasing causal effect is mainly achieved through research and development expenditure. (2) The national ETS exerts a more significant positive effect on power generation enterprises that are non-state-owned, have smaller asset scale, demonstrate superior environmental performance, and are located in the eastern region. However, there is no significant difference in total factor productivity across power enterprises. (3) Green innovations are predominantly concentrated in new energy and hybrid power generation enterprises. This study contributes to the literature by providing novel empirical evidence from China’s national ETS, highlighting its dual impact on innovation and productivity within a unified framework. The findings not only offer targeted recommendations for China’s power sector but also serve as an important reference for other high-emitting industries and other regions worldwide facing the same challenges in their pursuit of sustainable development.

The transformation of the transportation sector is critical for achieving Sustainable Development Goal 7 (SDG 7). As the world’s largest auto market, China has implemented various policies to promote sustainable transportation, particularly through the adoption of new energy vehicles (NEVs), thereby increasing the share of renewables in energy consumption and improving energy efficiency. Among these policies, the NEV driving restrictions exemption (NEV-DRE) policy has emerged as a key non-financial incentive to stimulate NEV demand. This study focuses on how the NEV-DRE policy affects the demand side of NEVs in the transportation sector. Employing a difference-in-differences design on a comprehensive dataset of vehicle transactions across 82 prefecture-level pilot cities from 2011 to 2019, this study provides robust causal evidence that the NEV-DRE policy significantly increases NEV sales. Furthermore, this study finds that this growth in demand is primarily driven by an increased consumer preference for domestic pure electric sedans. The policy proves more effective in cities with general driving restrictions, purchasing restrictions, and greater environmental awareness. Our findings demonstrate how innovative traffic management measures can be transformed into effective industrial policy tools, accelerating the adoption of renewable energy in the transportation sector. This study offers valuable insights for policymakers in China and elsewhere on how to design non-financial incentives to promote sustainable transportation, thereby promoting sustainable energy transitions and contributing to the achievement of SDG 7.