How green growth affects carbon emissions in China: the role of green finance

Accelerating the green transition of the economy is an effective way to conserve energy and reduce emissions, and its impact on the greenhouse effect deserves in-depth discussion. Based on this, we examine the potential effect of China's green growth on carbon dioxide (CO2) emissions by applying provincial panel data from 2004 to 2018. The regional heterogeneity and how does green finance affect the green growth-CO2 nexus are also checked. The primary findings imply that: (i) China's green growth achieves preliminary results, and its impact on CO2 emissions is significantly negative. Also, green finance can facilitate carbon emission reduction; (ii) significant regional heterogeneity exists within various regions. Only in the central and western regions can green growth effectively reduce CO2 emissions, and in the eastern and central regions, green finance is conducive to promoting carbon reduction; and (iii) the mediating role of green finance is significant. In other words, China's green growth not only mitigates the greenhouse effect directly, but also affects CO2 emissions indirectly by accelerating the development of green finance.

Automated summary

The study reveals that China's green growth has a significant reduction effect on CO2 emissions, and green finance plays a positive role in promoting carbon emission reduction. There are significant regional differences, with effective carbon reduction only occurring in the central and western regions. Additionally, green finance has a significant mediating role in the relationship between green growth and CO2 emissions.