Towards a green economic policy framework in China: role of green investment in fostering clean energy consumption and environmental sustainability.

Abstract

Recently, China has relished rapid green investment, and its influence on clean energy consumption and environment is substantial. Therefore, this study scrutinizes the effects of green investment on clean energy consumption and CO2 emissions in China by using autoregressive distributed lag model (ARDL) approach over time from 1998 to 2019. The results show that green investment tends to have a positive effect on clean energy consumption in China in the long run. The outcomes of study also show that green investment also tends to have a negative effect on CO2 emissions in China, but it has a small effect on carbon emissions in magnitude in the long run. Importantly, possible channels revealed green investment encouraging consumers and producers to consume clean energy, thereby positively affecting the environmental quality in China. Other control variables' findings show that environmental tax and financial development have increased the environmental quality by decreasing the CO2 emissions. Based on the findings, it recommends that green investment is considered necessary for encouraging clean energy consumption to reduce carbon emissions in high pollutant economies.