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Green finance drives the synergy of pollution control and carbon reduction in China: Dual perspective of effect and efficiency

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  • Hou, Mengyang
  • Xie, Yalin
  • Lu, Weinan
  • Cui, Xuehua
  • Xi, Zenglei
  • Han, Yuxin

Abstract

Green finance (GF) is a new pivotal instrument for the synergy of pollution control and carbon reduction. From the dual perspective of effect and efficiency, this study constructs an econometric model based on panel data from prefecture-level cities in China to evaluate the impact of GF on the synergistic effect (SET) and synergistic efficiency (SEY) of pollution control and carbon reduction. Additionally, the spatial spillover effects of GF and their geographical boundaries are analyzed. The results reveal a clear trend of enhancement in both SET and SEY, yet regional disparities are also exhibited. GF can drive both SET and SEY, with possible mechanisms to promote technological innovation, reduce energy consumption, and optimize energy structure. The role of GF in enhancing SET is more prominent in western regions, resource-based cities, cities with high-intensity environmental regulation, low-level of industrial upgrading, and high-level of financial development. The role of GF in improving SEY is more evident in central regions, non-resource-based cities, cities with low-intensity environmental regulation, high-level of industrial upgrading, and high-level of financial development. GF exhibits positive spatial spillover effects on both SET and SEY, which can radiate up to 400 km and 500 km, respectively.

Suggested Citation

  • Hou, Mengyang & Xie, Yalin & Lu, Weinan & Cui, Xuehua & Xi, Zenglei & Han, Yuxin, 2025. "Green finance drives the synergy of pollution control and carbon reduction in China: Dual perspective of effect and efficiency," Energy, Elsevier, vol. 330(C).
    • Handle: RePEc:eee:energy:v:330:y:2025:i:c:s0360544225025150
    DOI: 10.1016/j.energy.2025.136873
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