Green finance, renewable energy and carbon neutrality in OECD countries

Abstract

Many countries have committed to reducing carbon emissions based on an international roadmap entitled “carbon neutrality.” This study empirically investigates the effects of green finance and renewable energy sources on 38 OECD member states’ carbon neutrality target covering period from 2013 to 2021. According to the estimated findings, increasing the issued green bonds in OECD would bring about more achievements in the carbon neutrality target. In particular, A rise in green energy consumption of 1% is expected to result in an improvement of nearly 0.048% towards the carbon neutrality goal. Moreover, uncertainty has a negative impacts on the carbon neutrality of OECD with the most significant magnitude of coefficient among other explanatory variables. The primary policy implications are developing the green financial market, digital green financing tools, and sustainable power generation through three phases of locating, investing, and utilizing carbon market policy.