IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i15p7112-d1718406.html

The Impact of Green Finance on Energy Transition Under Climate Change

Author

Listed:
  • Zhengwei Ma

    (Karamay Campus, China University of Petroleum (Beijing), Karamay 834000, China)

  • Xiangli Jiang

    (College of Economics and Management, China University of Petroleum (Beijing), Beijing 102249, China)

Abstract

In recent years, growing concerns over environmental degradation and deepening awareness of the necessity of sustainable development have propelled green and low-carbon energy transition into a focal issue for both academia and policymakers. By decomposing energy transition into the transformation of energy structure and the upgrading of energy efficiency, this study investigates the impact and mechanisms of green finance on energy transition across 30 provinces (municipalities and autonomous regions) in China, with the exception of Tibet. In addition, the impact of climate change is incorporated into the analytical framework. Empirical results demonstrate that green finance development significantly accelerates energy transition, a conclusion robust to rigorous validation. Analysis of the mechanism shows that green finance promotes energy transition through the facilitation of technological innovation and the upgrade of industrial structures. Moreover, empirical evidence reveals that climate change undermines the promotional influence of sustainable finance on energy system transformation. The magnitude of this suppression varies nonlinearly across provincial jurisdictions with differing energy transition progress. Regional heterogeneity analyses further uncover marked discrepancies in climate–finance interactions, demonstrating amplified effects in coastal economic hubs, underdeveloped western provinces, and regions with mature eco-financial markets. According to these findings, actionable policy suggestions are put forward to strengthen green finance and accelerate energy transition.

Suggested Citation

  • Zhengwei Ma & Xiangli Jiang, 2025. "The Impact of Green Finance on Energy Transition Under Climate Change," Sustainability, MDPI, vol. 17(15), pages 1-22, August.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:15:p:7112-:d:1718406
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/15/7112/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/15/7112/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Claudia R. Binder & Susan Mühlemeier & Romano Wyss, 2017. "An Indicator-Based Approach for Analyzing the Resilience of Transitions for Energy Regions. Part I: Theoretical and Conceptual Considerations," Energies, MDPI, vol. 10(1), pages 1-18, January.
    2. Hosier, Richard H. & Dowd, Jeffrey, 1987. "Household fuel choice in Zimbabwe : An empirical test of the energy ladder hypothesis," Resources and Energy, Elsevier, vol. 9(4), pages 347-361, December.
    3. Burak Kazaz & Scott Webster, 2011. "The Impact of Yield-Dependent Trading Costs on Pricing and Production Planning Under Supply Uncertainty," Manufacturing & Service Operations Management, INFORMS, vol. 13(3), pages 404-417, July.
    4. Yuting Feng & Tong Zhao, 2022. "Exploring the Nonlinear Relationship between Renewable Energy Consumption and Economic Growth in the Context of Global Climate Change," IJERPH, MDPI, vol. 19(23), pages 1-17, November.
    5. Lee, Chien-Chiang & Feng, Yi & Peng, Diyun, 2022. "A green path towards sustainable development: The impact of low-carbon city pilot on energy transition," Energy Economics, Elsevier, vol. 115(C).
    6. Lee, Chien-Chiang & Xuan, Chengnan & Wang, Fuhao & Wang, Keying, 2024. "Path analysis of green finance on energy transition under climate change," Energy Economics, Elsevier, vol. 139(C).
    7. Jun Zhang & Haiqian Ke & Wei Zhang, 2022. "The Moderating Effect and Threshold Effect of Green Finance on Carbon Intensity: From the Perspective of Capital Accumulation," Complexity, Hindawi, vol. 2022, pages 1-16, August.
    8. Irfan, Muhammad & Rehman, Mubeen Abdur & Razzaq, Asif & Hao, Yu, 2023. "What derives renewable energy transition in G-7 and E-7 countries? The role of financial development and mineral markets," Energy Economics, Elsevier, vol. 121(C).
    9. Zhao, Jingjing & Heydari, Shahram & Forrest, Michael & Stevens, Alan & Preston, John, 2023. "Investigating correlates of personal and freight road transport energy consumption: A case study of England," Journal of Transport Geography, Elsevier, vol. 112(C).
    10. Alharbi, Samar S. & Al Mamun, Md & Boubaker, Sabri & Rizvi, Syed Kumail Abbas, 2023. "Green finance and renewable energy: A worldwide evidence," Energy Economics, Elsevier, vol. 118(C).
    11. Zhao, Congyu & Dong, Kangyin & Jiang, Hong-Dian & Wang, Kun & Dong, Xiucheng, 2023. "How does energy poverty eradication realize the path to carbon unlocking? The case of China," Energy Economics, Elsevier, vol. 121(C).
    12. Kim, Jeayoon & Park, Kwangwoo, 2016. "Financial development and deployment of renewable energy technologies," Energy Economics, Elsevier, vol. 59(C), pages 238-250.
    13. Lee, Chi-Chuan & Song, Hepeng & An, Jiafu, 2024. "The impact of green finance on energy transition: Does climate risk matter?," Energy Economics, Elsevier, vol. 129(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wu, Xiuqin & Zhang, Yi & Lee, Chi-Chuan, 2025. "Driving low-carbon energy transition with FinTech: The role of government environmental attention," Energy, Elsevier, vol. 330(C).
    2. Shah, Syed Sumair & Murodova, Gulnora & Khan, Anwar, 2025. "Contribution of green bonds and green growth in clean energy capacity under the moderating role of political stability," Renewable Energy, Elsevier, vol. 246(C).
    3. Shunan Fan & Yuhuan Zhao & Sumin Zuo, 2025. "Financial Development and Energy Transition: A Literature Review," Energies, MDPI, vol. 18(15), pages 1-28, August.
    4. Lee, Chien-Chiang & Xuan, Chengnan & Wang, Fuhao & Wang, Keying, 2024. "Path analysis of green finance on energy transition under climate change," Energy Economics, Elsevier, vol. 139(C).
    5. Kushawaha, Deepak & Jain, Manisha, 2025. "Understanding the dynamics of public debt on renewable energy investment in developing countries," Energy Economics, Elsevier, vol. 147(C).
    6. Yalcin, Haydar & Demirhan, Dilek & Aracioglu, Burcu & Daim, Tugrul U. & Xing, Zeyu & Meissner, Dirk, 2026. "FinTech and the green transition: Exploring pathways to ignite innovation for carbon neutrality in global supply chains," Technology in Society, Elsevier, vol. 84(C).
    7. Borojo, Dinkneh Gebre & Yushi, Jiang & Gong, Xueting & Zhang, Hongyu & Miao, Miao, 2024. "The heterogeneous impacts of climate finance on energy efficiency and renewable energy production in developing countries," Renewable Energy, Elsevier, vol. 236(C).
    8. Lee, Chien-Chiang & Wang, En-Ze, 2025. "Energy regulation and industrial robot adoption: The role of human capital," Energy Economics, Elsevier, vol. 146(C).
    9. Cheng, Zhen & Ding, Chante Jian & Zhao, Kunqian, 2025. "Energy use rights trading and carbon emissions," Energy, Elsevier, vol. 315(C).
    10. Wang, Kai-Hua & Jiang, Xin-Yu & Tang, Yun, 2025. "Artificial intelligence, cloud computing, blockchain, and the energy market in the era of energy transition," Energy Economics, Elsevier, vol. 151(C).
    11. Maket, Isaiah, 2024. "Rethinking energy poverty alleviation through financial inclusion: Do institutional quality and climate change risk matter?," Utilities Policy, Elsevier, vol. 91(C).
    12. Yan, Ying & Lin, Tao & Ma, Heng, 2025. "The impact of corporate climate risk on carbon intensity: Evidence from China," Energy, Elsevier, vol. 334(C).
    13. Gong, Binbin & Yang, Ning & Liu, Wenming, 2025. "How does the modernization of agriculture promote manufacturing firms' green transition?," Finance Research Letters, Elsevier, vol. 84(C).
    14. Ma, Yu & Wang, Yutian & Zhou, Xiangjun, 2024. "The impact of green finance on the development of the non-hydro renewable energy industry: An empirical study based on data from 30 provinces in China," Renewable Energy, Elsevier, vol. 227(C).
    15. Wang, Xiong & Hong, Keyi & Ren, Xiaohang & Taghizadeh-Hesary, Farhad, 2024. "Can green finance act as a catalyst to renewable energy deployment? Evidence from China using a spatial econometric approach," Energy, Elsevier, vol. 311(C).
    16. Cerqueti, Roy & Stefanelli, Kevyn, 2025. "Spotlighting energy sector through green transition attention," Energy, Elsevier, vol. 335(C).
    17. Xiaoxin Ma & Qian Mao, 2025. "Can Financial Development Promote Renewable Energy Transition? An Empirical Research Based on Global Panel Data," Sustainability, MDPI, vol. 17(20), pages 1-26, October.
    18. Yue Tang & Shixiang Li & Feng Wu, 2025. "How Does Carbon Emissions Trading Impact Energy Transition? A Perspective Based on Local Government Behavior," Sustainability, MDPI, vol. 17(12), pages 1-20, June.
    19. Jiang, Yuchen & Sun, Jiasen & Wu, Jie, 2025. "Determination of energy efficiency based on machine learning and efficiency assessment methods," Energy Economics, Elsevier, vol. 149(C).
    20. Luo, Jiahui & Dong, Jingrong & Tan, Zhixiong & Zhang, Haitao & Zhang, Wenqing, 2024. "Relatedness, digital economy and renewable energy product evolution—based on product space perspective," Energy Policy, Elsevier, vol. 186(C).

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:17:y:2025:i:15:p:7112-:d:1718406. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.