Abstract
The threats of climatic change on life, health, and the environment have been regarded by the joint consensus of scholars in the recent decades. With the advancement of global green development, green finance has paved the way for the government to respond to the challenges of climate change by providing mature financial services, appropriate financing, investment, and project funds related to environmental protection. In this context, green finance was proposed, and the relationship between green finance, renewable energy, and carbon emissions in the BRICS countries from 2000 to 2018 was further studied based on the quantile regression model. The presence of cross-sectional dependence in panel results is tested through CD and LM methods. The findings show the negative effect of green finance and non-fossil energy consumption on CO2 emissions. Furthermore, economic growth, trade openness, energy consumption, and foreign direct investment increase the CO2 emissions. Finally, the research results confirm that green finance is the best financial strategy to reduce carbon dioxide emissions.
Highlights
The increase in energy consumption due to fossil fuel leads to increased greenhouse gas (GHG) emissions as recorded in recent years and in turn affects economic growth
3.1.2 Data The descriptive statistics of CO2 emission and green finance are shown in Table 2, which demonstrates the share of renewable energy consumption, energy consumption calculated in British units of thermal energy per person, trade openness calculated as the percentage of trade to total GDP, GDP calculated in trillions of USD in current value, and foreign direct investment in trillions of dollars, respectively
The stability of the estimated results is tested through several robustness tests, applying Canay’s fixed quantile regression model followed by an alternative proxy indicator for the green finance index, which examines the variation in the main findings
Summary
The increase in energy consumption due to fossil fuel leads to increased greenhouse gas (GHG) emissions as recorded in recent years and in turn affects economic growth. Green finance paves the way for governments aiming to face the climate change challenge by providing sophisticated financial services, appropriate financing, investments, and funds for projects related to environmental protection. Rational capital allocation and real economy representation is the essence of finance, whereas the behavior of financial institutions to actively support the financing of energy conservation and environmental protection projects is referred to as green finance (Guild, 2020; Baloch et al, 2020; Chandio et al, 2021). This process enables industrial structure adjustment and economic development promotion.
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