The Impact of the COVID-19 Pandemic on Green Finance and Carbon Dioxide Emissions: Empirical Evidence from China

The Chinese government has expressed great confidence in the role of green finance in fulfilling its carbon neutrality commitment. However, the effectiveness of green finance, especially under the impact of emergencies such as the COVID-19 pandemic scenario, requires further examination. Using data from 2000 to 2020 in China, the correlation between green finance and carbon dioxide (CO2) emissions has been analyzed, both in BaU scenario and the COVID-19 scenario. The following conclusions were drawn: (1) In BaU scenario, green finance can effectively reduce CO2 emissions, especially through government green expenditure and green credit; (2) In COVID-19 scenario, although there is no direct relationship between the pandemic and carbon emissions, the data shows that the pandemic has hindered the progress of green finance, weakened its ability to curb carbon emissions, and indirectly led to an increase in carbon emissions. This study not only clarifies the mechanism by which the COVID-19 pandemic affects carbon emissions through the green finance system but also addresses the common problem of data scarcity in green finance research.