The Influence of Green Finance and Renewable Energy Sources on Renewable Energy Investment and Carbon Emission: COVID-19 Pandemic Effects on Chinese Economy

The recent COVID-19-induced global economic recession has led to lower natural resource prices, thereby reducing energy demand. Amid this concern, renewable energy projects have become uncompetitive and an obstacle to achieving the Sustainable Development Goals (SDGs). Following Pesaran et al.'s (Journal of Applied Econometrics, 16, 289-326, 2001) ARDL approach, green finance, renewable energy generation, and private energy investment have strong incremental effects on short-term and long-term renewable energy investment in China during 1980-2022. The findings also show that green finance, renewable electricity output, renewable energy consumption, and the square of gross domestic product (GDP2) have a significant negative impact, while gross domestic product (GDP) has a significant positive impact on China's long-term CO2 emissions. The positive association between GDP and carbon dioxide emissions and the negative relationship between GDP2 and carbon dioxide emissions rationalize the inverted U-shaped EKC hypothesis for China. The vector error correction model (VECM) Granger causality test indicates that renewable energy investment, green finance, renewable energy consumption, CO2 emission, and gross domestic product (GDP) have long-term causality. Policies must aim to control volatility and promote investment in renewable energy investment, green finance, and renewable electricity output for sustainable growth and the environment.