Green finance and energy transition to achieve net-zero emission target

This study measured the effects of green financing and energy transition on COP26 targets for 40 countries, namely, 14 economies with market-based financial systems and 26 countries with bank-based financial systems, from 2010 to 2020. The findings confirmed that, in the market-based financial system, GDP per capita has a positive coefficient, while for countries with a bank-based financial system, GDP per capita has a negative coefficient on greenhouse gas emissions. With a 1% improvement in the energy transition of countries under a market-based financial structure, greenhouse gas emissions will decrease by 0.08%. The central practical policies recommended by this research are enhancing green loans, bank financing, and green bank guarantees.