Assessing the role of green investment in energy efficiency: Does digital economy matter?

Energy efficiency is crucial for achieving a balance between economic growth and sustainable development. As carbon-neutral targets continue to gain momentum, green investments are becoming increasingly important. Therefore, it is critical to investigate the relationship between green investment and energy efficiency. This paper aims to fill a gap in the macroeconomic literature by using a generalized method of moments (GMM) technique based on panel data from 30 provinces in China from 2006 to 2019. The econometric results indicate that green investment is positively associated with energy efficiency. Additionally, green investment indirectly promotes energy efficiency by fostering technology innovation and research and development (R&D) intensity. The results also suggest that more advanced digital development is linked to improvements in energy efficiency. Furthermore, regions characterized by higher levels of digital economy exhibit a more pronounced contribution of green investment to energy efficiency. Based on these findings, this paper provides valuable insights for Chinese policymakers on green investment and low-carbon development.