Green perspectives of finance, technology innovations, and energy consumption in restraining carbon emissions in China: Fresh insights from Wavelet approach

Abstract

ABSTRACT Carbon dioxide (CO2) emission is a major contributor to global climate change and needs an instant reduction to preserve the environmental quality of the planet. To ensure this, our study examines the role of green factors in terms of finance, technology, and energy in reducing CO2 emissions in China using quarterly data spanning 2001Q1-2020Q4. A recently developed frequency- and time-varying technique named “Wavelet Local Multiple Correlation” is applied to examine the impact of considered factors on CO2 emission dynamics in short-, medium-, and long-term. Thus, our study is the first to provide detailed insights into the role of green factors in reducing CO2 emission in China in a multivariate context. The outcomes confirm the long-term positive connectedness among green finance, green technology, and green energy consumption. Secondly, all these factors are asymmetrically and negatively correlated to CO2 emissions in long-term frequencies. However, green energy and green finance are highly affecting the CO2 in long-term, while green technology in medium-term. Finally, the multivariate analysis confirms that all the explanatory variables follow a similar trend in affecting CO2 emission; though, green finance is the dominant factor in the correlation. Based on the findings, the study recommends promoting green innovations, financial measures, and renewable energy that help China to limit CO2 emissions and promote environmental quality.