Climate finance for energy security: An empirical analysis from a global perspective

Chi-Chuan Lee and Yuzhu Fang

Economic Analysis and Policy, 2025, vol. 85, issue C, 963-978

Abstract: Energy security has always been a global concern. Based on the OECD project database and employing a new data processing method, this research takes 80 countries as a sample to empirically analyze climate finance's impact on energy security from 2010 to 2020. The results indicate that climate finance significantly positively affects energy security of recipient countries. Particularly, its effect at enhancing energy security is more pronounced in lower-income countries, whereas in contrast its impact on high-income countries is not significant. Additionally, countries with balance of payments deficits benefit more from climate finance. Regarding potential impact mechanisms, technological progress is important through which climate finance affects energy security, while no significant correlation appears with private sector energy investment. Moreover, quantile regression analysis demonstrates a more pronounced positive impact of climate finance on countries with lower energy security levels. Conversely, the threshold regression model indicates a negative effect of climate finance on energy security in nations with weaker global governance capacity. Drawing upon these findings, this paper presents targeted policy recommendations aimed at optimizing the distribution of global climate finance and resources, fostering the attainment of international climate objectives, and promoting sustainable economic development.

Keywords: Climate change; Climate finance; Energy security; Global evidence (search for similar items in EconPapers)
JEL-codes: F35 O13 Q43 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:85:y:2025:i:c:p:963-978

DOI: 10.1016/j.eap.2025.01.006

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