Transformational insurance and green credit incentive policies as financial mechanisms for green energy transitions and low-carbon economic development

Haiying Liu, Zexiao Liu, Chunhong Zhang and Tianyu Li

Energy Economics, 2023, vol. 126, issue C

Abstract: This study examines the critical role of green technology innovation in facilitating green and low-carbon economic development. It underscores the necessity of financial backing via green finance policies to address financing and risk challenges associated with such an energy transition. A dynamic stochastic general equilibrium (DSGE) model, inclusive of the banking and insurance sectors, is constructed to proffer transformational insurance and green credit services to energy producers. Key findings include a decrease in deductibles, improved insurance coverage, enhanced green output, and an advancement of green and low-carbon economic growth. Transformational insurance is found to temper the negative impacts of unexpected risk shocks on overall output and employment. Moreover, green credit incentives not only curb carbon emissions but also heighten the likelihood of energy transition among producers, thereby fostering low-carbon economy growth. The combined application of transformational insurance and green credit incentive policy proves more effective in propelling energy transition and green economic growth than the deployment of either policy in isolation. The research concludes with a call for the government to strike a balance in carbon emission reduction efforts to avoid decelerating the overall output and consumption growth rates, thereby ensuring the sustainability of green and low-carbon economic development.

Keywords: Transformational insurance; Green credit; Energy transition; Carbon emission reduction; Government focus (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988323005145
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:126:y:2023:i:c:s0140988323005145

DOI: 10.1016/j.eneco.2023.107016

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().