TACKLING CARBON INTENSITY WITH GREEN FINANCE: STUDY OF OECD ECONOMIES

Lijing Lu, Haiyang Zheng, Meilan Chen and Hina Najam

Chapter 8 in Sustainable Growth and Green Policies:Navigating Energy and Environmental Challenges, 2025, pp 177-198 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Green financing has been examined in the literature. However, its impact on carbon intensity has not been fully investigated. This research sets out to fill this gap by using the dimensions of green loans, securities, insurance, and investment. In exploring the connections between green financing, nonfossil energy use, and carbon intensity, we utilized data from 2016 to 2020 to run an advanced quantile modeling. We applied the decision-making unit-method of data envelopment analysis for analyses. Our main findings are as follows. Rapid advances in the green finance sector in Organisation for Economic Co-operation and Development countries were coupled with an increase in nonfossil energy usage, resulting in a decline in carbon intensity. When the growth in nonfossil energy consumption was reduced, green investment was put on hold, and the green financing industry would be negatively impacted. The role of green financing and carbon intensity in nonfossil energy use is coupled with strong government policy interventions. Nonetheless, the effects of green finance initiatives often lag. Moreover, these effects are inconsistent. This research suggests new methods to increase the use of nonfossil energy, build a carbon trading market, and increase the consumption of green financing policies post COVID-19.

Keywords: Sustainable Growth; Green Policies; Energy Transition; Green Finance; Carbon Neutrality; Renewable Energy; Climate Change Policy; Environmental Sustainability; Economic Recovery; Carbon Markets; Sustainable Development; Energy Policy; Green Economic Recovery; Low-Carbon Economy; Financial Mechanisms For Sustainability; Climate Finance; Macroeconomic Policies and Sustainability; ESG Investing; Climate Resilience; Clean Energy Investment; Green Bonds; Sustainable Finance; Carbon Pricing; Energy Efficiency; Emerging Economies and Sustainability; Renewable Energy Financing; Circular Economy; Sustainable Investment; Climate Risk Assessment; Just Transition; ASEAN Energy Transition; BRICS Economies and Sustainability; OECD Green Policies; China's Carbon Market; EU Climate Policies; Southeast Asia Renewable Energy; Developing Economies and Climate Finance; Energy Poverty and Sustainable Solutions; Public Spending and Green Recovery; Net-Zero Policies; Econometric Models in Sustainability; Quantitative Analysis of Energy Markets; Cross-Sectional Autoregressive Distributed Lag Models; Behavioral Finance and Renewable Energy Investment; Policy Evaluation Frameworks; Decarbonization; Sustainable Development Goals; Green Growth (search for similar items in EconPapers)
JEL-codes: F64 O13 Q50 Q56 Q58 (search for similar items in EconPapers)
Date: 2025
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