Determinants of China's renewable energy industry development: do eco-innovation and financial inclusion matter?

Abstract

Fossil fuels are causing irreparable damage to the environment and lead to the depletion of reservoirs of coal, oil, and gas, which may give rise to the issue of energy scarcity and security. Therefore, policymakers and empirics have looked for alternative sources of energy that are affordable, reliable, and clean sources of energy. Consistent with this view, we have tried to examine the impact of eco-innovation and financial inclusion on renewable energy development in China. In order to empirically investigate, we have applied the autoregressive distributive lag model. The long-run estimates of eco-innovations are statistically significant and positive models, confirming that environmental-related innovations help increase the production of different renewable energy. Similarly, the long-run estimates of financial inclusion are positively significant, implying that an increase in financial inclusiveness intensifies the production of solar, biomass, and renewable energy in China. Generally, our findings imply that both eco-innovations and financial inclusion help increase renewable energy production in China in the long run.