The Impact of Renewable Energy on Carbon Neutrality for the Sustainable Environment: Role of Green Finance and Technology Innovations

Abstract

Over time environmental degradation has become a severe concern globally, especially in China. Therefore, to solve this serious issue, environmental economists have tried their best to explain the crux of environmental degradation. Besides such efforts, they have not reached a single opinion. Nowadays, economic progress has been considered a primary target to compete with other nations at any cost of environmental degradation. But, there may be some alternative solutions to reduce such costs, and the existing literature has not considered such core indicators. Thus, the present study assesses the eco-friendly variables for a sustainable environment in which green finance, green energy, and research and development expenditures. Moreover, this study also focuses on socio-economic factors like economic growth, urbanization, and openness. Time series estimators such as fully modified ordinary least square and Markov switching regression model are employed to investigate selected variables’ long-run impact on carbon emissions. The estimated outcomes show the significant contribution of green finance, green energy, openness, and R&D expenditures to environmental quality. Likewise, China’s urbanization and economic progress are harmful to environmental quality. Moreover, this study investigates the causal association between the selected variables and shows the two-way causal association between openness and emissions, RE and openness, and green finance and R&D expenditures. The results of the uni-directional association are also interesting. The current study develops some interesting policy implications for a sustainable environment on behalf of empirical outcomes.