Renewable energy resources investment and green finance: Evidence from China

The Covid-19 pandemic has caused a global economic recession which also shrunk natural resources prices due to reduction of the energy demand. In this concern, renewable energy projects also lose their competitiveness, which could hurdle the achievement of sustainable development goals. Current study investigated the causal link between renewable energy investment (IRE) and green finance (GFi), economic growth (GDP), renewable energy electricity output (REEO) and energy investment with private participation (EIPP) for China, covering the time series data over the 1990–2020 period. Using the wavelet power spectrum approach, this study reveals that IRE, REEO and GFi are more volatile than the GDP and EIPP across the selected time period. However, the wavelet coherence approach reveals that there is a bidirectional significant causal association between IRE and REEO, while the unidirectional causal association is found running from GDP to IRE and IRE to GFi. The causal relationship between these variables are found different in short and long-run with different time spanes. Besides, the EIPP did not showed any causal link to the IRE. Based on the empirical findings, this study recommends that policies must be design that could volatility in IRE, GFi REEO, and also enhance investment in these sectors to achieve sustainable economic growth, environment, and renewable energy production.