Work

Green finance curbs direct carbon emissions but exacerbates lifecycle carbon emissions in China’s electricity sector

Year: 2026

Type: article

Abstract: Green finance is widely used to support electricity-sector decarbonization, but conventional assessments often ignore upstream embodied emissions. Using a balanced panel of 30 Chinese provinces from 2011 to 2023, this study examines how green finance affects the annual growth of direct carbon intensity and lifecycle carbon intensity in the electricity sector. Two-way fixed-effects estimates show that green finance reduces direct carbon intensity growth by about 3.1 percentage points but increases lifecycle carbon intensity growth by about 3.4 percentage points. The divergence is robust to alternative measurements, sample restrictions, coefficient-stability tests, jackknife resampling, and supplementary instrumental-variable estimates. Mechanism results indicate that green finance improves the power mix and dispatch efficiency, while the lifecycle effect persists, consistent with upstream embodied emissions from clean-energy equipment and materials. The effect weakens within about 2 years at the provincial level. These findings highlight the need to incorporate lifecycle carbon accounting into green-finance evaluation.

Source: Cell Reports Sustainability

DOI: 10.1016/j.crsus.2026.100818

Authors: Jingcheng Li, Tianyang Wang, Menggang Li, Junjie Li

Institution: Beijing Jiaotong University

Language: English

Topic: Energy, Environment, Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Affordable and clean energy, Industry, innovation and infrastructure, Responsible consumption and production

Open Access status: gold

Estimated APC paid: $5,730