How do economies decarbonize growth under finance-energy inequality? Global evidence

Aviral Kumar Tiwari, Hai Hong Trinh, Diem Thi Hong Vo and Gagan Deep Sharma

Energy Economics, 2025, vol. 142, issue C

Abstract: The study investigates the multidecade complexity between economic growth and carbon emissions across income groups and regions for 180 economies over the past decades. We find that the global economy has been decarbonizing its economic growth. The effects of growth on decarbonization are conditional on outcome distributions. The Paris Agreement (COP21) and renewable energy consumption (REC) are robust mechanisms toward green growth. Financial development (FD) presents its moderation to decarbonized growth. The study makes the following novel contributions to prior literature streams. First, complex GDP-CO2 nexuses are conditional on green factors and decarbonization is foremost for our global inclusive growth. Second, the friendliness of FD to the environment relies on green transition. It is worth noting that financial institutions and markets are exposed to climate risk drivers leading to our great challenge to promote green finance. Decarbonization is our global and constant efforts toward inclusive growth. Under finance-energy inequality, renewable energy capacity and finance are critical to decarbonized economic growth.

Keywords: Green growth; Carbon risk; Climate change; Financial development; Energy transition (search for similar items in EconPapers)
JEL-codes: E02 E2 F4 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:142:y:2025:i:c:s0140988324008818

DOI: 10.1016/j.eneco.2024.108172

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