Influence of climate finance and natural resource consumption on the mitigation of climate change in developed countries in the Pre-COP26 era

Abstract

With the crippling effects of climate change, environmental consciousness is advancing to the stage where economies are being asked to make efforts to mitigate the challenges. Advanced economies, due to their large-scale development projects, are a major contributor to environmental devastation, and are thus obliged to provide the costs associated with climate change mitigation. Recent climate arbitration declares that climate finance is essential for climate change mitigation, which is viewed as a viable and sustainable mechanism to help mitigate harmful carbon pollution generation. This study takes 10 high emitter advanced economies to explore the simultaneous role of natural resource rent, climate financing, industrialization, economic growth and population growth in carbon emissions. Data extracted from recipient countries covers the period from 2009 to 2020, and Cup-FM and Cup-BC techniques are used for long-run analysis to assess the relationships outlined. The results show that special climate change funds and green bonds, which are indicators of climate finance, decreases carbon emissions. The same is the case for natural resource consumption, possibly due to the consumption of renewable resources which balances the resource equation. Finally, as envisioned, industrialization, economic growth, and population growth affect the environment to a greater degree. In light of this evidence, policy implications are drawn to provide a path for future researchers to bring interesting insight to the existing model.