Revisiting climate finance and green environmental technologies: The moderation of economic policy uncertainty

Abstract

Recent challenges in climate variation have emerged as a substantial concern for international communities. Presently, climate finance (CF) has emerged as a viable solution for mitigating climate change. CF, as a distinctive form of international support, seeks to foster sustainable development while concurrently enhancing CO 2 emissions. Therefore, the present study aims to estimate the impact of CF, green technological innovation (GTECH), economic policy uncertainty (EPC), and business freedom (BFD) on environmental sustainability (ES) from 2000 to 2023 for the N11 states (excluding South Korea due to unavailable data). Moreover, the moderation models are inspected for CF, GTECH, EPC, and BFD. However, theoretical support has aligned with the sustainable innovation perspective and the Sustainable Development Goals (SDG 9 and SDG 13). However, the integrated econometric estimates are carried out using the cross-sectional auto-regressive distributive lag technique, the methods of moments of quantile regression, and robustness verification via FMOLS and DOLS estimates. The findings showed that CF (−0.008) aids ES in the short term, while existing CF aids (0.019) are insufficient for supporting long-term ES. In parallel, GETCH (−0.077) and BFD (−0.183) contribute to enhancing ES. Similarly, EPC benefits the short term, but has destructive impacts on ES (1.510) in the long term. Interestingly, the moderation effects of CF*GTECH and CF*BFD aid ES at both short and long spans, while CF*EPC degrades ES. Consequently, a robust policy mechanism is required to regulate CF, and CF aid needs to be increased for developing states that benefit ES in the long term.