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Green finance as a catalyst: Driving embodied carbon efficiency in infrastructure development

Author

Listed:
  • Zheng, Yulan
  • Chen, Yu
  • Shen, Aolong

Abstract

Low-carbon infrastructure development constitutes a critical issue in global carbon governance. This study develops an extensive provincial-level green finance (GF) index and utilizes manually collected data from infrastructure-related industries spanning 2000–2022 to empirically examine the impact of GF on the embodied carbon efficiency of infrastructure. The findings reveal that GF significantly enhances the embodied carbon efficiency of infrastructure, primarily through three mechanisms: increasing investment in pollution control, stimulating green technological innovation, and promoting energy structure optimization. The positive effect of GF on infrastructure embodied carbon efficiency is more pronounced in provinces with higher marketization levels, coastal regions, areas with greater infrastructure investment, and those with stronger environmental awareness. Extended analyses suggest that GF not only reduces the input of energy factors in infrastructure construction but also boosts output value. By optimizing the factor allocation structure of infrastructure-related sectors, GF facilitates the low-carbon transition of infrastructure while sustaining economic growth. Moreover, GF contributes to both CO2 emissions reduction and high-quality development at the provincial level, demonstrating the dual dividends of coordinated carbon mitigation and economic advancement.

Suggested Citation

  • Zheng, Yulan & Chen, Yu & Shen, Aolong, 2025. "Green finance as a catalyst: Driving embodied carbon efficiency in infrastructure development," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325021087
    DOI: 10.1016/j.frl.2025.108854
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    References listed on IDEAS

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