Influence of green technology innovation and green finance on China’s carbon neutral performance: do synergistic effects exist?

Achieving sustainable economic growth requires not only reducing pollutant emissions but also carbon emissions. Carbon neutral performance, which encapsulates both of these emissions, has become a vital evaluation indicator in attaining sustainable development. This study thus analyzes the role that green technology innovation, green finance, and their synergistic effects play in enhancing carbon neutral performance and achieving sustainable growth based on data from 30 provinces in China from 2010 to 2021. Methodologically, we use the system GMM (SGMM) estimation to minimize the potential exogeneity. Empirical results show significant regional heterogeneity in carbon neutral performance, with higher carbon neutral performance found in South China. Moreover, green finance alone does not play an essential role in carbon neutral performance. In contrast, green technology innovation can contribute to carbon neutral performance, and the synergistic effects of the two can contribute to carbon neutral performance via the capital allocation effect channel and the technology effect channel. Furthermore, the synergistic effects are heterogeneous, in terms of regional variables, the scale of local green finance and the carbon neutral performance levels. Accordingly, the study recommends that China implement policies to promote green financial development and green technological innovation and thereby promote sustainable development.