The digital economy has been widely recognized for its potential to advance economic and environmental sustainability. However, despite extensive exploration, a critical gap persists in understanding how the allocation and reorganization of data factors within the digital economy can enhance energy efficiency. Specifically, the existing literature lacks empirical evidence on the causal relationship between data factor marketization and urban energy efficiency, as well as insights into the mechanisms underlying this relationship. Here, we applied a Staggered Difference-in-Differences (Staggered DID) approach to investigate the impact of data factor marketization on urban energy efficiency, using panel data from 270 Chinese cities spanning 2011 to 2021. We find that: (i) data factor marketization significantly promotes urban energy efficiency, with more pronounced effects observed in megacities, non-resource cities, and cities with higher levels of human capital
(ii) innovation and intellectual property protection are critical mechanisms through which data factor marketization enhances energy efficiency
and (iii) data factor marketization generates spatial spillover effects, improving energy efficiency in cities with similar levels of economic development. These findings illuminate the environmental benefits of the digital economy through the lens of data factor marketization. By offering new empirical evidence and theoretical insights, this study provides a foundation for data-driven urban sustainability initiatives and informs policy decisions aimed at fostering greener, more efficient urban energy systems.