Effectiveness of green bonds on carbon neutrality and clean electricity generation: Comprehensive evidence from the leading emitting country by disaggregated level analysis

Abstract

Considering increasing public interest in environment-related problems and the carbon-neutrality aims of countries, this study focuses on the effect of green bonds on enabling carbon neutrality and supporting clean electricity in China, which is the leading top carbon-emitting and energy-using country in the world. In this context, the study makes a disaggregated level empirical analysis by considering sectoral emissions and source-based electricity generation by using quantile-based approaches from January 2, 2019, to December 31, 2023. The outcomes show that (i) green bonds decrease mainly emissions in transport and international aviation sectors; (ii) green bonds have mixed effects on the remaining sectoral emissions; (iii) green bonds increase electricity generation from all sources at higher quantiles, whereas they decrease electricity generation at lower quantiles. Thus, the effect of green bonds varies across sectors, electricity generation sources, and quantiles. Accordingly, a set of policy endeavors, such as dealing with firstly such critical sectors as power and industry, supporting the allocated green bond issuance to specified sectors, and focusing on some clean electricity generation sources like solar and wind, are argued for China.