Work

Breaking the pollution cycle: Green energy transition, financial innovation, and climate resilience in Türkiye

Year: 2026

Type: article

Abstract: Türkiye's rapid economic development has heightened environmental degradation, underscoring the need for a green energy transition supported by sustainable financial innovation. This study investigates how financial innovation moderates the relationship between green energy and environmental quality in Türkiye from 1996 to 2021. A multidimensional environmental pressure index, capturing CO 2 damage, energy depletion, forest depletion, mineral depletion, and particulate emission damage, is developed to measure environmental degradation. Using the Kernel Regularized Least Squares (KRLS) machine learning approach, the results show that green energy significantly reduces environmental pressure, advancing Sustainable Development Goals 7 and 13. In contrast, financial innovation intensifies environmental pressure, while its interaction with green energy weakens the latter's environmental benefits. Foreign direct investment has no significant effect. These findings highlight the dual role of financial innovation as both an enabler and a constraint on environmental sustainability. Policymakers should therefore embed environmental safeguards within financial innovation frameworks, expand green finance instruments, and align financial sector development with Türkiye's low-carbon transition goals. The study contributes to ecological modernization theory and the finance–environment nexus by offering novel evidence from an emerging economy. • Green energy reduces Türkiye's environmental pressure significantly. • Financial innovation worsens environmental quality without regulation. • Interaction of finance and green energy undermines climate benefits. • Policy alignment is needed for sustainable finance and energy transition.

Source: Energy Strategy Reviews

DOI: 10.1016/j.esr.2026.102056

Authors: Mohammed Musah, Isaac Adjei Mensah, Thomas Appiah, Kwadwo Boateng Prempeh, Gertrude Amoakohene

Institutions: Ghana Communication Technology University, Kwame Nkrumah University of Science and Technology, Sunyani Technical University

Language: English

Topic: Energy, Environment, Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences