How does the digital economy affect urban CO₂ emissions? Mechanism discussion and empirical test

China is in the midst of a transition to a digital economy (DE), where information technology will be the main driver of production. China’s potential to meet its “30.60” commitment on time is correlated with the impact of DE on urban CO₂ emissions. With a focus on 279 cities between 2011 and 2019, this study employs the fixed-effect model and the intermediary effect model to experimentally analyze the effects and mechanism of the DE on CO₂ emissions. The results illustrate that: (1) The U-shaped nexus of DE and CO₂ emissions holds after endogeneity control and robustness tests. (2) The mechanism test discovered that the major reasons for the “U” constraints are industrial structure modification and energy efficiency. CO₂ emissions can be greatly decreased by upgrading and rationalizing the industrial structure; later on, CO₂ emissions rise as a result of the “energy rebound effect.” (3) According to quantile regression, areas with lower CO₂ emissions have less room in their industrial structure for reducing CO₂ emissions. As a result, energy structure adjustment must happen to avoid “energy rebound,” which would increase CO₂ emissions. Concerning the influence, mechanism, and geographical variations in DE growth on the low-carbon urban transformation, this study offers insightful implications.