Driving a green future: Spatial econometric analysis of climate finance aid in renewable energy transition in developing countries

Climate assistance plays a crucial role in supporting the mitigation and adaptation efforts of developing countries, particularly in fostering renewable energy transitions and enhancing energy security. This study evaluates climate aid's effectiveness using data from 88 developing countries between 2000 and 2020, applying a Spatial Durbin model. The results show that climate fund significantly boosts renewable energy development, primarily by improving political governance in recipient countries. Mitigation fund has a more substantial impact than adaptation finance. Additionally, countries that are more vulnerable to climate change benefit more from climate aid, while those with higher levels of social globalization struggle to fully utilize these resources. Notably, the study identifies negative spatial spillover effects, where climate fund in one country may hinder renewable energy development in neighboring countries. These insights are valuable for policymakers seeking to optimize climate aid and promote sustainable energy security.