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The Impact of Green Finance on Carbon Emissions in China: An Energy Consumption Optimization Perspective

Author

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  • Weicheng Xu

    (School of Economics, Ocean University of China, Qingdao 266100, China
    Institute of Marine Development, Ocean University of China, Qingdao 266100, China)

  • Xiaoyi Feng

    (School of Economics, Ocean University of China, Qingdao 266100, China)

  • Yiying Zhu

    (School of Economics, Ocean University of China, Qingdao 266100, China)

Abstract

From the perspective of energy consumption optimization, this paper studies the impact of green finance on carbon emissions in China. Firstly, based on the theoretical perspective, this paper explores the mechanism and path by which green finance influences carbon emissions, and analyzes the role of energy consumption in this process. Then, this paper utilizes the STIRPAT model, chain multiple mediation effect model and panel threshold model to empirically analyze the influence of green finance on carbon emissions, using provincial data from China from 2005 to 2019. The results are as follows: (1) Green finance significantly reduces carbon emissions. After accounting for potential endogeneity, this conclusion is still valid. The heterogeneity test reveals that the inhibitory effect is more remarkable in northern regions, high-carbon emission regions and energy-rich regions. (2) The results of the bootstrap test reveal that at the national level, green finance decreases carbon emissions through three paths: green technological innovation, ecological evolution of the industrial structure and green technological innovation facilitating ecological evolution of the industrial structure. Furthermore, in energy-rich regions, green finance significantly inhibits carbon emissions through all three paths, while in energy-poor regions, green finance reduces carbon emissions only through green technological innovation. (3) There is a nonlinear relationship between green finance and carbon emissions. Specifically, regardless of energy intensity or energy consumption structure, only when it is below the threshold can green finance significantly inhibit carbon emissions. Thus, realizing energy consumption optimization is an effective way to ensure the carbon emission reduction effect of green finance.

Suggested Citation

  • Weicheng Xu & Xiaoyi Feng & Yiying Zhu, 2023. "The Impact of Green Finance on Carbon Emissions in China: An Energy Consumption Optimization Perspective," Sustainability, MDPI, vol. 15(13), pages 1-23, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:13:p:10610-:d:1187532
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    Cited by:

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    2. Meryem Filiz Baştürk, 2024. "Does Green Finance Reduce Carbon Emissions? Global Evidence Based on System Generalized Method of Moments," Sustainability, MDPI, vol. 16(18), pages 1-13, September.
    3. Yangjie Liao & Xiaokun Zhou, 2023. "Can Digital Finance Contribute to Agricultural Carbon Reduction? Evidence from China," Sustainability, MDPI, vol. 15(22), pages 1-20, November.
    4. Muhammad Asif & Jian-Qiao Li & Muhammad Azam Zia & Muhammad Hashim & Uzair Aslam Bhatti & Mughair Aslam Bhatti & Ahmad Hasnain, 2024. "Environmental Sustainability in BRICS Economies: The Nexus of Technology Innovation, Economic Growth, Financial Development, and Renewable Energy Consumption," Sustainability, MDPI, vol. 16(16), pages 1-29, August.
    5. Kexin Hou & Muhammad Waqas, 2024. "Assess the Economic and Environmental Impacts of the Energy Transition in Selected Asian Economies," Energies, MDPI, vol. 17(20), pages 1-25, October.

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