Impact of Green Finance on Carbon Emissions Based on a Two-Stage LMDI Decomposition Method

Abstract

As the “double carbon” goal gains traction worldwide, achieving a balance between economic growth and environmental sustainability has become a focal point for researchers. Green finance, as a specialized financial service, offers a new approach to sustainable development. This study analyzed carbon emission sources in 25 Chinese provinces between 2007 and 2020, dividing them into energy structure, economic development, energy efficiency, and industrial structure, using a two-stage LMDI method. It then examines the linear and non-linear relationships between green finance and carbon emissions using spatial measurement methods. The findings indicate that green finance is an effective way to reduce carbon emissions, primarily through its impact on energy structure, energy efficiency, and industrial structure. There are significant non-linear relationships between green finance and the factors affecting carbon emissions, with spatial effects playing a significant role in carbon emissions influenced by energy structure, economic development, energy efficiency, and industrial structure.