This study probes climate policy design at city level in China, with Hangzhou’s energy efficiency (EE) and renewable energy (RE) policies between 2005 and 2014 as a case. The study applies a political action arena approach to accentuate the importance of different normative preferences behind climate change policies in relation to Hangzhou’s emerging urban climate governance regime. Three main categories of policy instruments are identified—that is, command-and-control, market-based, and collaborative governance instruments—and their development over time is examined. It is concluded that in Hangzhou EE is a more mature and comprehensive political action arena than RE. The study also finds that there has been a significant shift away from preferences toward command-and-control to more market-based instruments, while cooperative governance instruments are still in their infancy. It finally shows that the design and implementation of local programs, especially the selection of policy instruments, are strongly influenced by the normative preferences of local officials. Thus, the approach of Hangzhou’s government to the design and implementation of climate policies seem to gradually become less authoritarian, more market based, and more accountable due to the inherent complexity of this political action arena.