Does Green Finance Influence CO2 to Achieve Carbon Neutrality in China?
DOI:
https://doi.org/10.12974/2311-8741.2023.11.08Keywords:
Green finance, Carbon emission intensity, Nonlinear effects, Spatial spillover effects, ChinaAbstract
The advancement of green finance plays a pivotal role in filling the financing gap of carbon neutrality and promote the low-carbon transformation. However, there are relatively few empirical studies directly analyzing the nexus of green finance and carbon emission intensity, as well as their impact mechanism, nonlinear effect and spatial effect. Therefore, based on the panel data of 30 provinces and cities in China from 2007 to 2019, using System GMM (SYS-GMM), KHB, panel threshold model and spatial Durbin model (SDM), this paper investigates the effect and impact mechanisms of green finance on carbon emission (CO2). The results show that green finance significantly reduces CO2 intensity, which is still valid after a series of robustness tests. Second, the CO2 emission reduction effect of green finance exert asymmetric effects between financially developed and financially underdeveloped regions, industrially developed and industrially underdeveloped regions. Third, green finance mainly affects carbon emission intensity through factors such as FDI, energy consumption scale, energy intensity, green technology innovation, industrial structure upgrading and energy structure. Finally, CO2 emission reduction effect of green finance demonstrates nonlinear characteristics with diminishing marginal effects and spatial effects. Drawing upon these findings, this paper puts forward specific proposals on developing and innovating green finance to promote CO2 emission reduction and realize carbon neutrality.
References
Degroot D, Anchukaitis K, Bauch M, Burnham J, Carnegy F, Cui J, … Zappia N. Towards a rigorous understanding of societal responses to climate change. Nature, 2021; 591(7851): 539-550. https://doi.org/10.1038/s41586-021-03190-2
Sovacool BK. A perspective on treaties, maximum wages, and carbon currencies: Innovative policy instruments for global decarbonization. Energy Policy, 2022; 160: 112702. https://doi.org/10.1016/j.enpol.2021.112702
Davidson M, Karplus VJ, Zhang D, Zhang X. Policies and Institutions to Support Carbon Neutrality in China by 2060. Economics of Energy & Environmental Policy, 2021; 10(2): 7-25. https://doi.org/10.5547/2160-5890.10.2.mdav
Salazar J.Environmental finance: Linking two world.Presented at a Workshop on Financial Innovations for Biodiversity Bratislava,1998; 1: 12-18.
Labatt S,White R.Environmental finance: A Guide to environmental risk assessment and financial products. Canada: John Wiley & Sons, 2002.
Taghizadeh-Hesary F,Yoshino N.The way to induce private participation in green finance and investment.Finance Research Letters, 2019; 31: 98-103. https://doi.org/10.1016/j.frl.2019.04.016
Ren X, Shao Q, Zhong R. Nexus between green finance, non-fossil energy use, and carbon intensity: Empirical evidence from China based on a vector error correction model. Journal of Cleaner Production, 2020; 277. https://doi.org/10.1016/j.jclepro.2020.122844
Zhang B, Yang Y, Bi J. Tracking the implementation of green credit policy in China: top-down perspective and bottom-up reform. J Environ Manage 2011; 92: 1321-1327. https://doi.org/10.1016/j.jenvman.2010.12.019
Zhou G, Liu C, Luo S. Resource Allocation Effect of Green Credit Policy: Based on DID Model. Mathematics 2021; 9. https://doi.org/10.3390/math9020159
Hu Y, Jiang H, Zhong Z. Impact of green credit on industrial structure in China: theoretical mechanism and empirical analysis. Environ Sci Pollut Res Int 2020; 27: 10506-10519. https://doi.org/10.1007/s11356-020-07717-4
Zhang D, Zhang Z, Managi SA bibliometric analysis on green finance: Current status, development, and future directions. Finance Research Letters 2019; 29: 425-430. https://doi.org/10.1016/j.frl.2019.02.003
Peng H, Feng T, Zhou C. International experiences in the development of green finance. American Journal of Industrial and Business Management 2018; 8(02): 385. https://doi.org/10.4236/ajibm.2018.82024
Zhang S, Wu Z, Wang Y, Hao Y. Fostering green development with green finance: An empirical study on the environmental effect of green credit policy in China. Journal of Environmental Management , 2021; 296: 113159. https://doi.org/10.1016/j.jenvman.2021.113159
Ezroj A. Carbon Risk and Green Finance. London; New York: Routledge, 2020. https://doi.org/10.4324/9781003095996
Azhgaliyeva D, Kapsaplyamova Z, Low, L. Implications of fiscal and financial policies for unlocking green finance and green investment (No. 861). ADBI Working Paper, 2018. https://doi.org/10.1007/978-981-13-0227-5_32
Volz U. Fostering green finance for sustainable development in Asia. Routledge Handbook of Banking and Finance in Asia, Routledge, London 2019; 488-504. https://doi.org/10.4324/9781315543222-27
Chen S. Green finance and development of low carbon economy. In LTLGB 2012. Springer, Berlin: 2013: 457-461. https://doi.org/10.1007/978-3-642-34651-4_65
Zhang K, Li Y, Qi Y, Shao S. Can green credit policy improve environmental quality? Evidence from China. Journal of Environmental Management, 2021; 298: 113445. https://doi.org/10.1016/j.jenvman.2021.113445
Jin Y, Gao X, Wang M. The financing efficiency of listed energy conservation and environmental protection firms: Evidence and implications for green finance in China. Energy Policy, 2021; 153: 112254. https://doi.org/10.1016/j.enpol.2021.112254
Shao Y. Does FDI affect carbon intensity? New evidence from dynamic panel analysis. International Journal of Climate Change Strategies and Management, 2018. https://doi.org/10.1108/IJCCSM-03-2017-0062
Wang X, Wang Q. Research on the impact of green finance on the upgrading of China's regional industrial structure from the perspective of sustainable development. Resources Policy, 2021; 74: 102436. https://doi.org/10.1016/j.resourpol.2021.102436
Xu L, Fan M, Yang L, Shao S. Heterogeneous green innovations and carbon emission performance: Evidence at China's city level. Energy Economics, 2021; 99: 105269. https://doi.org/10.1016/j.eneco.2021.105269
Ulucak R, Khan SUD. Relationship between energy intensity and CO2 emissions: Does economic policy matter?. Sustainable Development, 2020; 28(5): 1457-1464. https://doi.org/10.1002/sd.2098
Shahbaz M, Solarin SA, Sbia R, Bibi S. Does energy intensity contribute to CO2 emissions? A trivariate analysis in selected African countries. Ecological indicators, 2015; 50: 215-224. https://doi.org/10.1016/j.ecolind.2014.11.007
Xu SC, He ZX, Long RY. Factors that influence carbon emissions due to energy consumption in China: Decomposition analysis using LMDI. Applied Energy, 2014; 127: 182-193. https://doi.org/10.1016/j.apenergy.2014.03.093
Li Y, Yang X, Ran Q, Wu H, Irfan M, Ahmad M. Energy structure, digital economy, and carbon emissions: evidence from China. Environmental Science and Pollution Research, 2021; 28(45): 64606-64629. https://doi.org/10.1007/s11356-021-15304-4
Wang Z, Zhu Y, Zhu Y, Shi Y. Energy structure change and carbon emission trends in China. Energy, 2016; 115: 369-377. https://doi.org/10.1016/j.energy.2016.08.066
Malik MY, Latif K, Khan Z, Butt HD, Hussain M, Nadeem MA. Symmetric and asymmetric impact of oil price, FDI and economic growth on carbon emission in Pakistan: Evidence from ARDL and non-linear ARDL approach. Science of the Total Environment, 2020; 726: 138421. https://doi.org/10.1016/j.scitotenv.2020.138421
Pazienza P. The impact of FDI in the OECD manufacturing sector on CO2 emission: Evidence and policy issues. Environmental Impact Assessment Review, 2019; 77: 60-68. https://doi.org/10.1016/j.eiar.2019.04.002
Wang Y, Liao M, Xu L, Malik A. The impact of foreign direct investment on China's carbon emissions through energy intensity and emissions trading system. Energy Economics, 2021; 97: 105212. https://doi.org/10.1016/j.eneco.2021.105212
Zhou X., Zhang J, Li J. Industrial structural transformation and carbon dioxide emissions in China. Energy policy, 2013; 57: 43-51. https://doi.org/10.1016/j.enpol.2012.07.017
Chang N. Changing industrial structure to reduce carbon dioxide emissions: a Chinese application. Journal of Cleaner Production, 2015; 103: 40-48. https://doi.org/10.1016/j.jclepro.2014.03.003
Zeng S, Li G, Wu S, Dong Z. The Impact of Green Technology Innovation on Carbon Emissions in the Context of Carbon Neutrality in China: Evidence from Spatial Spillover and Nonlinear Effect Analysis. International Journal of Environmental Research and Public Health, 2022; 19(2): 730. https://doi.org/10.3390/ijerph19020730
Töbelmann D, Wendler T. The impact of environmental innovation on carbon dioxide emissions. Journal of Cleaner Production, 2020; 244: 118787. https://doi.org/10.1016/j.jclepro.2019.118787
Razzaq A, Wang Y, Chupradit S, Suksatan W, Shahzad, F. Asymmetric inter-linkages between green technology innovation and consumption-based carbon emissions in BRICS countries using quantile-on-quantile framework. Technology in Society, 2021; 66: 101656. https://doi.org/10.1016/j.techsoc.2021.101656
Pei Y, Zhu Y, Liu S, Wang X, Cao J. Environmental regulation and carbon emission: The mediation effect of technical efficiency. Journal of Cleaner Production, 2019; 236: 117599. https://doi.org/10.1016/j.jclepro.2019.07.074
Huang Y, Chen C. The spatial spillover and threshold effect of green finance on environmental quality: evidence from China. Environmental Science and Pollution Research, 2021; 1-12. https://doi.org/10.1007/s11356-021-16892-x
Wang F, Wang R, He Z. The impact of environmental pollution and green finance on the high-quality development of energy based on spatial Dubin model. Resources Policy, 2021; 74: 102451. https://doi.org/10.1016/j.resourpol.2021.102451
Li C, Gan Y. The spatial spillover effects of green finance on ecological environment-empirical research based on spatial econometric model. Environmental Science and Pollution Research, 2021; 28(5): 5651-5665. https://doi.org/10.1007/s11356-020-10961-3
Lei X, Wang Y, Zhao D, Chen Q. The local-neighborhood effect of green credit on green economy: a spatial econometric investigation. Environmental Science and Pollution Research, 2021; 28(46): 65776-65790. https://doi.org/10.1007/s11356-021-15419-8
Huang J, Chen X, Cai X, Zou H. Assessing the impact of energy-saving R&D on China's energy consumption: Evidence from dynamic spatial panel model. Energy, 2021; 218. https://doi.org/10.1016/j.energy.2020.119443
Rafiq S, Salim R, Nielsen I. Urbanization, openness, emissions, and energy intensity: a study of increasingly urbanized emerging economies. Energy Economics, 2016; 56: 20-28. https://doi.org/10.1016/j.eneco.2016.02.007
Liu J, Li S, Ji Q. Regional differences and driving factors analysis of carbon emission intensity from transport sector in China. Energy, 2021; 224: 120178. https://doi.org/10.1016/j.energy.2021.120178
Kohler U, Karlson KB, Holm A. Comparing coefficients of nested nonlinear probability models. The Stata Journal, 2011; 11(3): 420-438. https://doi.org/10.1177/1536867X1101100306
Shan Y, Liu J, Liu Z, Xu X, Shao S, Wang P, Guan D. New provincial CO2 emission inventories in China based on apparent energy consumption data and updated emission factors. Applied Energy, 2016; 184: 742-750. https://doi.org/10.1016/j.apenergy.2016.03.073
Saboori B, Sulaiman J, Mohd S. Economic growth and CO2 emissions in Malaysia: A cointegration analysis of the Environmental Kuznets Curve. Energy Policy, 2012; 51: 184-191. https://doi.org/10.1016/j.enpol.2012.08.065
Wang H, Wei W. Coordinating technological progress and environmental regulation in CO2 mitigation: The optimal levels for OECD countries & emerging economies. Energy Economics, 2020; 87. https://doi.org/10.1016/j.eneco.2019.104510
Yu Y, Du Y. Impact of technological innovation on CO2 emissions and emissions trend prediction on 'New Normal' economy in China. Atmospheric Pollution Research, 2019; 10: 152-161. https://doi.org/10.1016/j.apr.2018.07.005
Zhao B, Yang W. Does financial development influence CO2 emissions? A Chinese province-level study. Energy, 2020; 200. https://doi.org/10.1016/j.energy.2020.117523
Brouwers R, Schoubben F, Van Hulle C. The influence of carbon cost pass through on the link between carbon emission and corporate financial performance in the context of the European Union Emission Trading Scheme. Business Strategy and the Environment, 2018; 27, 1422-1436. https://doi.org/10.1002/bse.2193
Ren S, Hao Y, Xu L, Wu H, Ba N. Digitalization and energy: How does internet development affect China's energy consumption? Energy Economics, 2021; 98. https://doi.org/10.1016/j.eneco.2021.105220
Xu B, Lin B. Can expanding natural gas consumption reduce China's CO2 emissions?. Energy Economics, 2019; 81, 393-407. https://doi.org/10.1016/j.eneco.2019.04.012
Zhou G, Sun Y, Luo S, Liao J. Corporate social responsibility and bank financial performance in China: The moderating role of green credit. Energy Economics, 2021; 97, 105190. https://doi.org/10.1016/j.eneco.2021.105190
Zhang D, Mohsin M, Rasheed AK, Chang Y, Taghizadeh-Hesary, F. Public spending and green economic growth in BRI region: Mediating role of green finance. Energy Policy, 2021; 153, 112256. https://doi.org/10.1016/j.enpol.2021.112256
Wang XH, Liu JH, Zhao YX. Green financial reform and innovation experimental zone of the effective measure. Journal of quantitative technical economics, 2021; 38 (10): 107-127.
Elhorst JP. Matlab software for spatial panels. International Regional Science Review, 2014; 37(3): 389-405. https://doi.org/10.1177/0160017612452429
LeSage J, Pace RK. Introduction to spatial econometrics. Chapman and Hall/CRC, 2009. https://doi.org/10.1201/9781420064254