<p>This paper focuses on the significant differences in the impact of green finance and digital finance on energy transition. Using a panel data from Chinese cities, we found that, overall, both green finance and digital finance play a positive role in promoting energy transition. Employing the Panel Smooth Transition Regression (PSTR) model, this paper reveals key findings: robust development of green finance is necessary, while strategic allocation of digital finance can maximize the effect of energy transition. The heterogeneity of cities requires policymakers to avoid blindly following any single financial instrument. This study not only emphasizes the important role of emerging financial instruments in energy transition and dual carbon goals but also provides practical guidance for the expansion direction of urban financial sectors.</p>