ARTICLE

https://doi.org/10.1057/s41599-023-01595-0 OPEN

Green finance, renewable energy development, and

climate change: evidence from regions of China
Yunpeng Sun1 ✉, Qun Bao2 & Farhad Taghizadeh-Hesary 3✉

In this study, using data from 2010 to 2021, and by utilizing the stochastic impacts by
regression on population, affluence, and technology (STIRPAT) theory, and system gen-
1234567890():,;

eralized method of moments, the effect of green financing and deployment of renewable
energy on carbon dioxide emissions in China and its provinces were analyzed. The results
show that green financing reduces environmental pollution at the country level. Moreover,
with a 1% increase in renewable energy consumption, carbon dioxide emission can be
expected to decrease by 0.103%. It also demonstrates that green financing has a statistically
significant coefficient only in provinces located in the eastern and western regions. Chinese
policymakers should incentive policies for provinces in the eastern region of China in order to
have a cleaner environment. The central region should be under supportive and pressure
policies to move faster along the path to sustainable development.

1 School of Economics, Tianjin University of Commerce, Tianjin, China. 2 School of Economics, Nankai University, Tianjin, China. 3 School of Global Studies,

Tokai University, Tokyo, Japan. ✉email: [email protected]; [email protected]

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C
Introduction
limate change is a complex concept in the literature on finance can be seen as a bridge to renewable energy deployment in
environmental economics and human challenge in the countries, particularly where the government does not have suf-
global context. Undoubtedly, climate change causes dis- ficient capital to invest in green projects. Rasoulinezhad and
turbances in agricultural production (risk to food security), global Taghizadeh-Hesary (2022) have declared that green finance is a
warming, droughts, and geopolitical tensions related to water. helpful instrument for governments that cannot invest sig-
Some scholars believe that the threat of climate change is nificantly in renewable energy projects. On the one hand, green
unsolvable in the short term because of its global nature; there- financing can increase the number of green projects implemented
fore, it requires global unity and policy to be solved. Li et al. in countries; on the other hand, it will attract more capital from
(2021) have argued that climate change has no simple solution the private sector to green projects.
and necessitates global unity and alignment. Froehlich et al. This study primarily examines the relationship between green
(2022) have stated that the threat of climate change is a potential finance, renewable energy deployment, and climate change in
risk to food security, economic resilience, and global peace. China. China is a leading Asian country in terms of establishing
Therefore, there is an urgent need for more international efforts various plans to develop green energy consumption across var-
to eliminate this threat. ious industries. As shown in Table 1, China is among the coun-
However, it should be noted that efforts have been made, albeit tries that have implemented policies (green tax, green loans, green
small and integrated, to deal with climate change. These efforts financing, green innovation, green jobs, and green transportation)
(e.g., the U.N. Framework Convention on Climate Change of to diversify pathways to reach its sustainability targets. In the last
1992, the Kyoto Protocol of 1992, and the Paris Agreement of decade, financing green projects has become a priority for the
2015) have included international agreements to implement Chinese government. According to The State Council of China
integrated and aligned policies to reduce the threat of climate (2021), the country provided over 2.5 trillion U.S. dollars in green
change. Huang and Zhai (2021) have mentioned that global loans by the end of 2021 (nearly 30% growth over 2020). It should
treaties are inefficient on their own, and countries’ commitment be mentioned that in 2020, China ranked first in the world in
to these agreements must increase. Zhang et al. (2017) have providing green loans (USD 1.8 trillion) and second in the world
highlighted the importance of countries’ alignment to make in issuing green bonds (USD 125 billion). The development of
international agreements on climate change more efficient. They green financial policies in China has become more critical after its
have mentioned the withdrawal of the U.S. from the Paris vision to achieve peak carbon by 2030 and carbon neutrality by
Agreement, which has lowered the validity of this global treaty. 2060. Wang et al. (2021) have emphasized the role of China’s two
Other efforts have included regional cooperation and a plan to current climate change policies (peak carbon and carbon neu-
overcome the challenges of climate change. In this regard, the trality) as a pathway toward the era of the Chinese climate
Regional Dialog on Carbon Pricing in ASEAN, the 2030 E.U. economy. Therefore, China should attempt to make its green
Climate Target Plan, and the Africa Clean Energy Corridor can financial system more efficient and attract more private capital to
be considered successful cases. Rabe (2022) has declared that green economic projects.
regional planning to mitigate climate change threats can be Given the importance of studying the case of China regarding
considered a significant step toward global unification. In another how green finance and renewable energy deployment can affect
study, Das et al. (2022) have confirmed that intra-regional climate change, this research makes the following contributions
planning for renewable energy sources can efficiently promote to the existing literature:
environmental protection and combat climate change. Other
efforts have included local policies to promote environmental i. It conducts a regional study of China that does not consider
protection, green energy deployment, and lower carbon China’s country-level data. China has more than 1.4 billion
emissions. people and a relatively wide geographical area
Countries have implemented various policies to combat cli- (9,600,013 sq. km). Therefore, it should be regionally
mate change. As a roadmap for implementing such policies, investigated. Therefore, in this study, data analysis of
countries must have a long-term plan or clear vision of their different regions of China was conducted as a panel data
sustainability goals. For example, in 2020, China announced its framework.
plans to achieve peak carbon by 2030 and carbon neutrality by ii. It uses the stochastic impacts by regression on population,
2060; in 2020, Japan declared its plan to implement net-zero affluence, and technology (STIRPAT) theoretical frame-
emissions by 2050. Other plans have included CanREA’s 2050 work to explain the research problem and econometric
Vision, UAE’s National Energy Strategy 2050, Qatar’s National modeling.
Vision 2030, Turkish renewable energy vision 2023, Korea’s iii. It uses carbon dioxide emissions per capita as a proxy for
Energy Master Plan 2035, Germany’s landmark Renewable climate change and issued green bonds as a proxy for the
Energy Act 2021, and Singapore’s Green Plan 2030; all of these green financing variable.
roadmaps have clear targets and set out intermediate, operational, The results showed that green financing reduces environmental
and final goals. pollution at the country level. Additionally, with a 1% increase in
Under these long-term plans, countries are implementing renewable energy consumption, carbon dioxide emission can be
deterrent and incentive policies and tools based on their econo- expected to decrease by 0.103%. Therefore, green financing has a
mies’ systems, weaknesses, and strengths. The most important statistically significant coefficient only in provinces located in the
policies are listed in Table 1. eastern and western regions. Chinese policymakers should insti-
The critical point for implementing the policies listed in Table 1 tute incentive policies in provinces in the eastern region of China.
is the development of related projects and sufficient capital to The central region should be under supportive and pressure
invest in them. Therefore, financing green projects has been one of policies to move faster along the path to sustainable development.
the most critical and challenging topics among experts (e.g., The remainder of this paper proceeds as follows. Section
Tolliver et al., 2020; see also Cicchiello et al., 2022, Li et al., 2022; “Literature review” provides a brief literature review and clarifies
Han and Li, 2022) in recent years. Without an efficient green the literature gaps this study tries to fill. The section “Green
financing system, a country cannot advance its sustainable policies in China” provides information on green policies in
development goals or reduce climate-related threats. Green China. Section “Data and model specification” discusses the data

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Table 1 Countries’ policies to combat the climate change threat.

Policy Case of implementation Source

Green loan policy China, the UAE Zhang (2022), Al-Qudah et al. (2022), Tan et al. (2022)
Green tax policy Iran, Germany, China, Ecuador Norouzi et al. (2022), van der Ploeg et al. (2022), Wang and Yu (2021), Terneus Páez
et al. (2022)
Green bonds policy The E.U., China, Japan, the U.S. Cicchiello et al. (2022), Li et al. (2022), Han and Li (2022), Tolliver et al. (2020)
Green innovation policy China, E7 Wang et al. (2022), Hao and Chen (2022)
Green job creation policy Italy, the U.S., China Bowen et al. (2018), Zhang and Du (2020), Dell’Anna (2021)
Green transportation China, the UAE, Pakistan Kiani (2017), Meng et al. (2021), Shahid et al. (2022)

Source: The authors.

and model specifications, and the section “Empirical results” the ARDL approach to analyze annual data from 2007 to 2019 in
presents the empirical findings. The last section presents the China to determine how green energy can help the country
concluding remarks, a discussion of practical policies, and achieve its decarbonization target. The results showed that, in the
recommendations for further research. long term, green energy development could decrease carbon
dioxide emissions in China. Dong et al. (2022) employed the
STIRPAT approach to study carbon emissions mitigation in
Literature review China. They have found a negative correlation between green
Several earlier studies have drawn attention to the impacts of energy deployment and carbon emissions. Abbasi et al. (2022)
green finance and renewable energy deployment on climate compared the impacts of green and fossil fuel energy resources on
change in China. climate change in China. Employing dynamic ARDL and annual
A group of scholars has focused on the importance of green data from 1980 to 2018, they have concluded that green energy
finance in China’s sustainable development. Li et al. (2021) used deployment has short- and long-term positive impacts on CO2
the wavelet power spectrum approach to investigate the role of mitigation. In another study, Lin and Qiao (2022) explored how
green finance in China after the COVID-19 pandemic. The major green electricity can be adopted into people’s lifestyles to help
findings have confirmed the unidirectional causal relationship China lower its environmental pollution. The major results
between renewable energy and green finance in China. In a recent revealed that reasonably priced green electricity could stimulate
study, Zhou and Xu (2022) evaluated the impact of green finance people to use it, leading to lower carbon emissions in China. Zhu
on regional ecological enhancement in China. The results of the et al. (2022) have addressed the role of green energy resources in
estimations using the generalized method of moments (GMM) mitigating fossil-fuel-based CO2 emissions in rural China from
model revealed a U-shaped relationship between the two vari- 2007 to 2018. The findings have highlighted the significant long-
ables. Zhu et al. (2022) have discussed the role of green finance in term impact of green energy resource development on rural
terms of the development goals in China. Analyzing annual data environmental protection in the country. Wang et al. (2023)
from 1986 to 2019, they revealed a positive association between studied net energy-related carbon dioxide emissions in China.
green finance and green development in China. Irfan et al. (2022) The empirical findings have confirmed the positive role of green
have investigated the relationship between green finance and energy development in industrial production in the country.
green innovation at the regional level in China. Using the panel Zhang et al. (2023) also confirmed the positive effect of green
Vector Autoregression (VAR) technique and annual data from energy resources on agricultural land expansion in China.
2010 to 2019, they showed that green finance positively impacts Farmland expansion policy can be strengthened through the
green innovation across all regions of China. Lin et al. (2022) deployment of renewable energy sources.
have explored the impact of green finance on CO2 emissions Based on a summary of the most recent research, it can be said
reduction in China from 2007 to 2018. A dynamic spatial Durbin that many studies have been conducted on green finance in
model has confirmed that green finance in China is efficient and China; however, it seems that the results of such research are not
can lower carbon dioxide emissions. Zhang et al. (2022) useful to policymakers. Hou et al. (2022) have shown that the
attempted to determine how green finance enhanced urban city- impact of green financing on climate threats in China is hetero-
level green development in China from 2002 to 2019. The major geneous across different provinces. Additionally, the STIRPAT
results highlighted the role of green finance in lowering urban method, as a supporting theory of the econometric model, has
energy intensity. Hou et al. (2022) concentrated on five provinces rarely been used (see Dong et al., 2022). The selection of variables
in China in 2017 to explore the role of green financial policies in for the econometric model should have a clear theoretical basis.
promoting environmental quality. They employed a difference- This study considered the effects of renewable energy consump-
in-differences model and concluded that green finance has a tion and green financing on China’s climate threat using a model.
heterogeneous effect among the examined provinces. Furthermore, the selection of modeling variables was explained
Previous studies have focused on the impact of green energy based on the structure of the STIRPAT theory. The analysis was
deployment on climate change in China. Qi et al. (2014) have conducted at the regional level in China. Each of the aforemen-
attempted to identify a link between CO2 emissions and renew- tioned cases represents a literature gap that this research will fill.
able energy development in China from 2010 to 2020. The major
findings confirmed the positive role of renewable power genera-
tion in reducing CO2 emissions in the short term. Chen et al. Green policies in China
(2019) employed the autoregressive distributed lag (ARDL) The history of green policies in China dates back to 1972 when
bounds testing approach using annual data from 1980 to 2014 to China attended the first United Nations Conference on the
study the relationship between renewable energy and CO2 Human Environment. A decade later, in 1983, the Chinese
emissions in China. They have concluded that any increase in government announced that protecting the country’s environ-
green energy deployment leads to decreased carbon dioxide ment required government policy. In 1998, the State Environ-
emissions in the short and long term. Recently, Wang (2022) used mental Protection Administration (SEPA) was established

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because of a flood disaster that became a national crisis. From its In Eq. (1), carbon dioxide emissions per capita are used as a
establishment in 1998 to 2002, the current administration has proxy for the impact of climate change, whereas P, A, and T
carried out essential actions in the environmental field. The denote population (labor force as proxy), affluence (income per
SEPA policy of converting fields into forests in China during capita as proxy), and technology proxy with green finance.
this period caused more than 7.7 million hectares of agricultural
land to be converted to forest land. From 2002 to 2015, various Data and model specification
green policies were developed in China, most of which were According to the theoretical framework, Eq. (1) can be trans-
ineffective because of the need for fossil fuels to support China’s formed into an econometric Eq. (2), as follows:
manufacturing industries. The signing of the Paris Agreement φ φ φ
on December 12, 2015, by China and 195 other countries set a Ii;t ¼ ηPi;t1 Ai;t2 Ti;t3 μi;t ð2Þ
suitable road map for China to pay more attention to envir- Equation (2) in the logarithm form can be transformed into
onmental issues. Additionally, the introduction of the Sustain- Eq. (3), as follows:
able Development Goals by the United Nations on January 1,
2016, doubled China’s motivation to achieve sustainable devel- logIi;t ¼ η þ φ1 logPi;t þ φ2 logAi;t þ φ3 logTi;t þ μi;t ð3Þ
opment. In April 2019, China promoted the Belt and Road The extension of Eq. (2,) comprising covariate variables (X),
Initiative International Green Development Coalition as the first can be written as Eq. (4), as follows:
Chinese regional sustainable plan. In 2020, China launched its
vision of peak carbon by 2030 and carbon neutrality by 2060 as logIi;t ¼ φ0 þ φ1 logPi;t þ φ2 logAi;t þ φ3 logTi;t þ βlogXi;t þ si þ μi;t
two major projects aimed at improving air quality and envir- ð4Þ
onmental protection in the global context. China is a pioneer in
In Eq. (4), s and μ represent unobserved factors of the error
implementing green financing to support green projects. Since
term, which have a normal distribution.
March 2016, according to China’s 13th Five-Year Plan for
The covariate variables in this study were renewable energy
Economic and Social Development, the country has established
deployment and inflation rates, which impact climate change.
a green financing system that includes green credit, green bonds,
Data on the variables (carbon emissions per capita, labor force,
and green development funds. The Agricultural Bank of China
income per capita, green finance, inflation, and renewable energy
issued its first green bonds in late 2015. Recently, the Chinese
deployment) were gathered from 2010 to 2021 for 25 Chinese
government has supported these policies. In 2021, China’s green
provinces. The data were collected from China’s National Bureau
bond market was the second largest after that of the U.S. The
of Statistics, the Statistical Yearbook of each province, and the
country issued over 1643 green bonds valued at USD 270 billion
China Statistical Yearbook on the environment. It should be
in 2021. Regarding green loans, Chinese banks provided nearly
noted that China’s first green bonds were printed in 2015, which
USD 2.5 trillion in 2021, compared to around 1.8 trillion in
is why we extracted the green financing variable of Chinese
2020. China’s economic sector targets for developing green
provinces since 2010 using the weighted average of green loans
financing markets are green transportation, emerging industries,
and green bonds.
and industrial energy savings. In February 2021, the Chinese
To estimate the coefficients in Eq. (4), the system GMM
State Council published a roadmap for the transition pathway
approach proposed by Arellano and Bover (1995) is employed.
toward green and recycling development by 2025, and enhanced
The empirical model, in the form of the system GMM approach,
environmental protection in pursuit of the target of a “beautiful
is shown in Eq. (5) as follows:
China” by 2035 (China briefing, 2022). In February 2022, the
Chinese State Council announced guidelines to accelerate the yi;t ¼ αyi;t1 þ β0 Xi;t þ μi þ εi;t ð5Þ
establishment and enhancement of a green and renewable eco-
where y is the dependent variable, yt−1 represents the lag term,
nomic system.
and X represents the independent variables. It should be men-
tioned that the before–after estimation tests are conducted to
Theoretical background explore the appropriate estimation technique and ensure the
In this study, the supporting theory of econometric modeling is the validation of the empirical findings.
STIRPAT theory, presented by Dietz and Rosa (1997). Given that
this study aims to evaluate the impacts of green finance and
Empirical results
renewable energy development on climate change, the effects of the
In the first stage, it is necessary to perform tests to determine the
variables on climate change could be addressed through the popular
most appropriate estimation technique. Accordingly, a first-
environmental STIRPAT pattern. This theory addresses the impact
generation panel unit root test (ADF test) is conducted. Table 2
of human activity (I) on the quality of the environment. Human
reports the results of the stationarity test of the series.
activity (I) is comprised of the following three factors: population
It is argued that, in panel data studies, there may be cross-
(P), affluence (A), and technology (T). The advantages of employing
sectional dependency among the samples; therefore, it was
this theory to construct the empirical model are as follows: (i) this
necessary to carry out the second generation of panel unit root
theory can explain the channels of impacts of issued green bonds
and renewable energy deployment on climate change; (ii) this theory
is useful for hypothesis decomposition, which is necessary to obtain Table 2 First-generation panel unit root test.
practical policies for countries; and (iii) anthropogenic factors such
as urbanization, human development, and health can be evaluated Variable ADF stat. Probability
through STIRPAT theory. This directly impacts the relationship Carbon emissions per capita −1.743 0.045
between human activity and the environment. Labor force −3.488 0.000
The relationship between the environment and human activity Income per capita −2.944 0.024
in the STIRPAT framework can be represented by Eq. (1) as Green finance −3.100 0.000
follows: Consumer price index −5.883 0.015
Renewable energy deployment −2.943 0.049

I ¼ f ðP; A; T Þ ð1Þ Source: The authors.

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tests (CIPS and C.Z. tests). The results of the two tests are pre- emissions. China’s per capita income also positively affects carbon
sented in Table 3. dioxide emissions. An increase in per capita income means an
Based on the results of the first- and second-generation panel increase in people’s purchasing power and consumption of more
unit root tests, it can be concluded that all variables were sta- goods. This consequently suggests an increase in fossil energy
tionary and stable processes. consumption and carbon dioxide emissions. Green financing has a
Next, the coefficients were estimated using the system GMM small, negative impact coefficient. By increasing the volume of
technique. The results of the estimations are presented in Table 4. green financing in China, carbon dioxide emissions can decrease
Table 4 shows that carbon dioxide emission per capita posi- by 0.015%. The consumer price index (CPI) positively and sig-
tively affects this variable in the present time, and this effect was nificantly affects carbon dioxide emissions. Generally, with an
statistically significant. The labor force has a positive coefficient, increase in the CPI, the capital rental rate and acquisition of bank
meaning that a 1% increase in China’s labor force leads to facilities increase; therefore, the price of green projects increases.
increased carbon dioxide emissions per capita. An increase in the As a result, investors will not desire to participate in such projects;
labor force in a country will mean an increase in industrial pro- therefore, the excessive consumption of fossil fuels will continue in
duction capacity and, subsequently, in the country’s economic China, causing more carbon dioxide emissions. Renewable energy
growth. In a country like China, whose manufacturing industries consumption had a coefficient of 0.103. Therefore, a 1% increase
depend on fossil fuels, the increase in economic growth from the in renewable energy consumption is expected to decrease CO2
growth of industrial production will result in more carbon dioxide emissions by 0.103%.
Given the vast geographical area of China and the difference in
the level of development across its provinces, the effectiveness of
Table 3 Second-generation panel unit root tests. green financing and consumption of renewable energy varies
from province to province. To obtain more practical findings, we
Variable CIPS Probability C.Z. Probability categorized 25 selected provinces based on their geographical
location into the following three regions: west, east, and center.
Carbon emissions −2.554 0.013 −1.232 0.014
per capita
The three-panel frameworks for these three regions were analyzed
Labor force −2.821 0.003 −2.493 0.025 using the system GMM, as reported in Table 5.
Income per capita −3.193 0.030 −2.044 0.019 Lagged CO2 emissions impacted only the provinces in the
Green finance −2.442 0.014 −1.483 0.015 central and western regions of China, while the coefficient of
Consumer price index −2.593 0.041 −3.830 0.010 lagged CO2 emissions was not statistically significant for the
Renewable energy −2.993 0.039 −2.391 0.024 eastern region’s provinces. The labor force across all three regions
deployment of China positively and significantly affected carbon dioxide
emissions. The magnitude of this effect in the central region was
Source: The authors.
greater than that in the other two regions, a major reason for
which is the existence of many heavy industries in the provinces
of the central region of China. Regarding income per capita, the
Table 4 System GMM estimations for all examined estimation results showed that the effect of this variable on car-
provinces in China. bon dioxide emissions was positive in the central and western
regions, and only the states located in the eastern region of China
had a negative effect coefficient. This may be because the eastern
Variable Coefficient t-stat p-value
provinces of China are more developed, and the higher the
Lagged CO2 emissions per capita 0.329 3.10 0.074 income levels in these provinces, the more the people are willing
Labor force 0.013 2.54 0.031 to change their lifestyles in a green way to protect the environ-
Income per capita 0.033 3.92 0.002
ment. Green financing had a statistically significant coefficient
Green finance −0.015 −3.10 0.063
Consumer price index 0.049 1.93 0.002
only in provinces in the eastern and western regions. Moreover,
Renewable energy deployment −0.103 −3.04 0.008 this variable’s influence on reducing carbon dioxide emissions
Sargan test 0.9541 was more significant in the eastern region of China. An important
AR (1) 0.0005 reason for this is that the eastern regions of China are more
AR (2) 0.2943 developed. Therefore, people in these regions have greater
potential to participate in the green financing market and green
Source: The authors.
projects. The use of renewable energy across all regions of China
has had a positive effect on reducing carbon dioxide emissions.

Table 5 System GMM estimations for three regions of China.

Variable Central region Eastern region Western region

Lagged CO2 emissions per capita 0.345 (0.01) 0.003 (0.449) 0.132 (0.002)
Labor force 0.409 (0.00) 0.023 (0.032) 0.033 (0.000)
Income per capita 0.392 (0.00) −0.112 (0.000) 0.119 (0.00)
Green finance −0.001 (0.392) −0.422(0.01) −0.031 (0.00)
Consumer price index 0.312 (0.00) 0.132 (0.00) 0.178 (0.042)
Renewable energy deployment −0.003 (0.00) −0.221 (0.04) −0.004 (0.023)
Sargan test 0.853 0.911 0.983
AR (1) 0.015 0.019 0.003
AR (2) 0.483 0.432 0.231

Numbers in () are p-values.

Source: The authors.

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Table 6 Robustness check.

Variable Central region Eastern region Western region

Lagged greenhouse gas emissions 0.019 (0.04) 0.13 (0.166) 0.203 (0.00)
Labor force 0.011 (0.08) 0.281(0.00) 0.113 (0.04)
Income per capita 0.025 (0.01) −0.014 (0.00) 0.202 (0.06)
Green finance −0.13 (0.332) −0.109(0.05) −0.094 (0.01)
Consumer price index 0.114 (0.04) 0.54 (0.01) 0.039 (0.023)
Renewable energy deployment −0.013 (0.02) −0.522 (0.02) −0.032 (0.013)

Numbers in () are p-values.

Source: The authors.

However, its influence in the eastern region has been greater than sustainable development. On September 22, 2020, the president of
that in the other two regions. The CPI also had a significant China announced that, in line with the Sustainable Development
coefficient and positive sign for all three regions. Therefore, in all Goals, his country would try to reach peak emissions before 2030
provinces of China, an increase in the CPI is an obstacle to and carbon neutrality before 2060. To achieve these two impor-
developing sustainable development policies. tant targets, China should formulate and approve two separate
To ascertain the validity of the empirical findings, a robustness policy groups at the national and provincial levels. At the mac-
check was employed. Accordingly, the dependent variable (CO2 roeconomic level, China’s policymakers should try to create green
emissions per capita) was substituted using greenhouse gas jobs (to create a positive effect where increasing the labor force
emissions. The empirical model was re-estimated using the sys- reduces carbon dioxide emissions), increasing the green basket of
tem GMM approach for Chinese regions. The results, as reported consumption in society (increasing the per capita income will
in Table 6, confirmed that the signs of the coefficients were improve environmental conditions), better development of the
consistent with the earlier estimations (Table 5). green financing market, wider financial support for green projects
(to neutralize the negative effect of inflation on the development
Conclusions and policy recommendations of green projects), and make more efforts to increase the con-
Concluding remarks. The threat of climate change has become a sumption of renewable energy. However, at the regional and
topic of concern for the international community in recent dec- provincial levels, China’s policymakers should institute more
ades. Despite several meetings and discussions with experts and incentive policies for the provinces in the eastern region so that
politicians, humankind has not been able to remove the shadow they can move more easily along the path of sustainable devel-
of this threat from life on the planet. Given its high volume of opment. Conversely, the central region should be under sup-
fossil fuel use, China has made a significant contribution to the portive policies (granting green loans and green subsidies) and
creation and persistence of this threat. In this study, using data pressure policies (carbon tax) to move faster toward sustainable
from 2010 to 2021, the STIRPAT theory, and the econometric development. The uniformity of applied policies toward different
method of panel data, the effect of green financing and deploy- provinces and regions can become a factor in their ineffectiveness
ment of renewable energy on the carbon dioxide emissions of and the creation of inequality in the sustainable development of
China and its provinces have been analyzed and interpreted. The regions in the long term (Chen, 2022).
findings show that green financing has a slight negative impact
coefficient on environmental pollution at the country level. By
increasing the volume of green financing in China, carbon Future research recommendations. This study provides practical
dioxide emissions can decrease by 0.015%. Moreover, renewable findings and innovative management policies for experts and
energy consumption has a coefficient of 0.103. This indicates that policymakers in China and worldwide. It is important that China,
by increasing renewable energy consumption by 1%, CO2 emis- as the largest contributor of greenhouse gas emissions and a
sions can be expected to decrease by 0.103%. However, at the major consumer of fossil fuels, creates a managed balance in its
regional level of analysis, green financing has a statistically sig- provinces in the field of sustainable development. The results of
nificant coefficient only for the provinces located in the eastern this study significantly contribute to achieving this goal. However,
and western regions. Additionally, this variable’s influence on there were limitations (e.g., access to local data) in conducting
reducing carbon dioxide emissions is more significant in the this research. It is suggested that, in future research, field research
eastern region of China. The critical reason for this is that the and survey methods be used to obtain complementary results.
eastern regions of China (e.g., Shanghai) are more developed; Given the spread of COVID-19 since the end of 2019 and its
therefore, the people in these regions have more potential to transformation into a worldwide pandemic, future research
participate in the green financing market and green projects. The should investigate the effect of this pandemic on the relationship
use of renewable energy across all regions of China has had a between green financing and climate change. More advanced
positive effect on reducing carbon dioxide emissions. However, econometric methods, such as artificial neural networks, could be
the influence in the eastern region has been greater than that in used to predict the relationships between variables in the future.
the other two regions. Such research can help China reach its goals of peak carbon by
2030 and carbon neutrality by 2060.
Practical policies. According to the obtained results, the issue of
clean energy policies at the provincial and country levels in China
is worth mentioning. The Chinese government should pay more
attention to encouraging leading provinces in the field of
renewable energy and supporting lagging provinces in the fight Data availability
against environmental pollution. Chinese leaders must make The datasets generated and analyzed in the current study are
strong decisions about the future of their country by supporting available from the corresponding author upon reasonable request.

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HUMANITIES AND SOCIAL SCIENCES COMMUNICATIONS | https://doi.org/10.1057/s41599-023-01595-0 ARTICLE

Received: 28 October 2022; Accepted: 27 February 2023; Lin B, Qiao Q (2022) Exploring the acceptance of green electricity and relevant
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We acknowledge the financial support of the Grant-in-Aid for Excellent Young
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