The New Energy Demonstration City (NEDC) policy is a crucial measure to promote energy transition and achieve the "dual carbon" goals. A systematic assessment of its impact on environmental welfare performance is essential for advancing sustainable energy development and enhancing residents' well-being. Economic development, environmental pollution, and residents' health factors were simultaneously incorporated into the measurement of environmental welfare performance. A two-stage network super-efficiency SBM model was applied to calculate this indicator, and the impact of the NEDC policy on environmental welfare performance is evaluated. The findings are as follows. First, the NEDC policy significantly improves environmental welfare performance, and this conclusion remains valid after a series of robustness tests. Second, environmental regulation and average temperature play positive moderating roles in the impact of the NEDC policy on environmental welfare performance, while average altitude exerts a negative moderating effect. The NEDC policy promotes the improvement of environmental welfare performance by enhancing energy utilization efficiency and new infrastructure construction. Third, in terms of geographical location, the impact of the NEDC policy on environmental welfare performance is more significant in eastern and southern China, and is significant in regions on both sides of the "Hu Huanyong Line". In terms of urban characteristics, the promotion effect is more pronounced in megacities, central cities, and cities with carbon trading platforms, while it has an inhibitory effect in large megacities. Fourth, the impact of the NEDC policy on environmental welfare performance has a positive spatial spillover effect. It provides policy implications for the government to optimize energy development and improve residents' well-being.