| Summary: | As an effective measure to solve the dilemma of urban energy consumption and economic development, the new energy demonstration city (<i>NEDC</i>) policy in China could greatly promote the development of the new energy industry and urban economy. This study aims to explore how the <i>NEDC</i> policy effectively promotes the growth of urban land use efficiency (<i>ULUE</i>), an essential indicator of economic development, through the urban industrial structure. Based on the panel data of 285 Chinese cities during 2003–2019, this study took the <i>NEDC</i> policy as a quasi-natural experiment and employed the PSM-DID method and the mediating effect model to objectively evaluate its policy effects. We found that the <i>NEDC</i> policy could significantly promote the growth of the <i>ULUE</i>. Specifically, the <i>ULUE</i> has been significantly improved by 17.0%. The <i>NEDC</i> policy could also promote the <i>ULUE</i> indirectly through the mediating effect of industrial structure advancement (<i>ISA</i>), but the mediating effect of industrial structure rationalization (<i>ISR</i>) was not significant. Furthermore, the promotional effect of the <i>NEDC</i> policy on the <i>ULUE</i> has regional heterogeneity. Compared with eastern cities and high-innovation cities, central and western cities and medium-innovation and low-innovation cities can obtain much higher promotion effects. This study may provide some policy inspiration for policymakers to support low-corban and sustainable economic development and urban land use.
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