An evaluation of the impact of China's green credit policy on different pathways using a CGE model.

Abstract

The objective of the study was to quantitatively analyze the heterogeneous effects of different green credit implementation methods on energy, environmental, and economic systems by developing a computable general equilibrium model. The specific green credit implementation methods are divided into interest-penalty policy for energy-intensive industries andinterest preferential policy for green industries. Various approaches to implementing green credit can lead to distinct impacts on energy consumption, environmental outcomes, and economic performance. Green credit policy experiments are carried out utilizing short-, medium-, and long-term scenarios to investigate how the consequences of green credit policies evolve. The findings demonstrate that (1) implementing a penalty interest policy for energy-intensive industries can have substantial short-term environmental effects, cutting total demand for fossil energy and lowering carbon dioxide emissions significantly. As the cycle progresses, this effect will progressively fade and have a negative economic impact. (2) The interest preferential policy for the green industry has a significant promoting effect on green technology, and its energy and environmental effects will be reflected in the long term, and the effect will continue to increase, which has a positive promoting effect on the economy. (3) There are significant differences in the policy effects brought about by the different implementation methods of green credit policies. Both policies can positively affect social energy and the environment, but the effect cycles are different. When two types of interest policies are implemented in the economy, the negative economic effect of the penalty interest policy is greater than the positive effect of the preferential interest policy, which harms the macroeconomy. These conclusions will provide theoretical and practical references for the government and banks to choose a better green credit implementation path.