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The Effect of Clean Energy Financial Investment on Carbon Reduction

Author

Listed:
  • Collins C. Ngwakwe

    (University of Limpopo, Polokwane, South Africa)

Abstract

Accounting and finance are intricately intertwined with the global quest for environmental sustainability by applying accounting and finance tools for carbon reduction initiatives. Clean energy financial investment is one of the many alternative tools through which accounting contributes to carbon reduction. Accordingly, this paper analysed the impact of separate and integrated clean energy investment alternatives on carbon reduction. Data on clean energy financial investment and carbon emission per capita were collected from the International Energy Agency (IEA) and Our World in Data archives, respectively. Data was analysed by using multiple pooled OLS to evaluate the impact of individual clean energy financial investments on carbon reduction and the impact of integrating the various clean energy financial investment alternatives on carbon reduction separately. Findings show that individual clean energy financial investments may not separately offer desired carbon reduction, hence, albeit some negative coefficients, individual clean investments showed no significant impact on carbon reduction. However, furthering the test by pooling all the clean energy financial investment alternatives shows a significant negative effect of clean energy financial investment on carbon reduction at a P-value of 0.05. This shows that an integration of different alternatives of clean energy financial investment may offer an enhanced reduction of carbon emission, which outweighs the effect of relying on a single clean energy investment alternative. The findings offer significant insight for policy makers' future strategies towards a combination of multiple clean energy financial investments. Furthermore, the findings from this paper are a further testament that accounting and finance are connected with the global quest for environmental sustainability through the application of accounting and financial investment tools in conducting clean energy financial investment.

Suggested Citation

  • Collins C. Ngwakwe, 2024. "The Effect of Clean Energy Financial Investment on Carbon Reduction," Oblik i finansi, Institute of Accounting and Finance, issue 1, pages 49-53, March.
    • Handle: RePEc:iaf:journl:y:2024:i:1:p:49-53
    DOI: 10.33146/2307-9878-2024-1(103)-49-53
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    References listed on IDEAS

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    1. Mariola Piłatowska & Andrzej Geise, 2021. "Impact of Clean Energy on CO 2 Emissions and Economic Growth within the Phases of Renewables Diffusion in Selected European Countries," Energies, MDPI, vol. 14(4), pages 1-24, February.
    2. Raghutla, Chandrashekar & Shahbaz, Muhammad & Chittedi, Krishna Reddy & Jiao, Zhilun, 2021. "Financing clean energy projects: New empirical evidence from major investment countries," Renewable Energy, Elsevier, vol. 169(C), pages 231-241.
    3. Zhang, Dongyang & Mohsin, Muhammad & Taghizadeh-Hesary, Farhad, 2022. "Does green finance counteract the climate change mitigation: Asymmetric effect of renewable energy investment and R&D," Energy Economics, Elsevier, vol. 113(C).
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    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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