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Green finance, private investments and fossil fuels rents

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  • Zhang, Xiaoyu
  • Xi, Yanling

Abstract

Private investment and green finance have significantly influenced the fossil fuel industries in various countries. This study investigates the impact of green finance and private investment on fossil fuel rents in 20 major carbon-emitting nations from 2000 to 2020. Using ARDL estimation, findings reveal that a 1% increase in green finance reduces fossil fuel rents by 0.37% in the short term and 0.40% in the long term, driven by greater investments in sustainable energy. Conversely, a 1% increase in private investment leads to a 0.17% short-term and 0.23% long-term rise in fossil fuel rents, indicating limited private green investment. To address this gap, the study recommends policies such as green bond incentives, strengthened ESG reporting, improved financial risk management, enhanced business climates, digitalization of green financial markets, and sustainable governance in the fossil fuel sector.

Suggested Citation

  • Zhang, Xiaoyu & Xi, Yanling, 2024. "Green finance, private investments and fossil fuels rents," Resources Policy, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:jrpoli:v:99:y:2024:i:c:s0301420724007827
    DOI: 10.1016/j.resourpol.2024.105415
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    More about this item

    Keywords

    Green finance; Private investment; Fossil fuels rent; Private sustainable investment; Major carbo emitters;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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