Navigating the nexus of renewable energy, industrialization, financial technology, and carbon emissions: An in-depth analysis and policy framework

Abstract

The debate over decoupling industrialization from carbon emissions has a long empirical history. This study posits FinTech as a potential decoupler. Focusing on the interconnections between renewable energy, industrialization, FinTech, and carbon emissions, the research examines how these factors interact in the context of escalating global environmental challenges. To explore these dynamics, the study employs principal component analysis (PCA) alongside an asymmetric panel quantile autoregressive distributed lag model with a pooled mean group specification (A-QARDL-PMG). The moderating role of FinTech is explored as a potential decoupler between industrialization and deindustrialization in relation to carbon emissions. A large body of evidence across all quantiles indicates that financial technology has the potential to boost economic growth and reduce carbon emissions, primarily due to its facilitation of access to sustainable activities. The study emphasizes the significance of green industrialization initiatives while analyzing the impacts of industrialization and deindustrialization on emissions. It further investigates the moderating effect of financial technology on industrial emissions and offers relevant policy recommendations. In addition, the study explores economic complexity and emission reduction across various quantile levels, providing insights potentially useful for future endeavors. This research aims to comprehend the intricate relationship between these components to identify sustainable ways for economic growth rather than focusing solely on short-term solutions. Regulations pertaining to industry transitions, governance of financial technologies, and the promotion of renewable energy development are highlighted.