GOVERNANCE AND GREEN FINANCE: EXAMINING RENEWABLE ENERGY INVESTMENTS FOR CARBON REDUCTION IN ASIAN ECONOMIES

Abstract

ABSTRACT

 Introduction: This paper explores the relationship between renewable energy investments and governance in Asian countries, emphasizing the need to balance economic growth with environmental sustainability. As rapid industrialization and population growth heighten energy demand, Asian countries face unique challenges in reducing carbon emissions while continuing to develop economically. The study’s primary objective is to analyze how renewable energy investments, moderated by governance quality, impact carbon reduction in the region. Background: Asian countries, especially major economies like China and India, contribute significantly to global carbon emissions. Despite contributing approximately 50% of global emissions, these countries also have immense potential to lead in sustainable practices due to their significant influence on both global GDP and environmental policies. Current pressures on nations to meet climate goals underscore the urgency of sustainable development in these regions. This paper addresses the research question: How does governance quality affect the success of renewable energy investments in reducing carbon emissions in Asian countries? Recency: The paper provides timely insights, utilizing data from 2019 to 2023, a period marked by substantial shifts in renewable energy policies and green financing mechanisms within Asia. Previous research often overlooks the complex and potentially nonlinear relationships between governance, green finance, and renewable energy investments, which this paper aims to explore in depth. Research Methods: The study uses a panel dataset covering Asian countries from 2019 to 2023, focusing on variables such as carbon emissions, renewable energy consumption, green finance, and government effectiveness. Advanced econometric tools, including Cross-Sectional Augmented Dickey-Fuller and Common Stochastic Trends tests, are employed to capture the dynamic interactions between these factors. These methods help reveal the nonlinear aspects of renewable energy investments, particularly how governance can amplify or limit the environmental benefits of such investments. The study’s rigorous methodology allows for a detailed exploration of the complexities in Asia’s transition to sustainable energy.

Keywords: Sustainable development, Governance, Renewable energy investment, Asian