<p>The world is experiencing serious environmental problems because of the excessive use of fossil fuel. To this end, the United Nations in the Sustainable Development Goal 13 calls for an urgent action to alleviate climate change and its effects. This research contributes to literature in investigating ways that can be adopted to promote environmental sustainability in the emerging economies that use more polluting energy sources to advance economic growth, through using Turkey as the case study. Therefore, the role of green finance and trade openness in promoting environmental sustainability is investigated, using the load capacity factor as a comprehensive proxy. Unlike prior research that primarily relies on carbon emissions or ecological footprint, load capacity factor integrates both environmental demand and biocapacity supply. Using annual data from 2000 to 2022 and the ‘Autoregressive Distributed Lag’ approach, results indicate that green finance, renewable energy, and trade openness significantly enhance load capacity factor in both short- and long-term. In contrast, economic growth and technological innovation are found to deteriorate environmental quality. Policy implications advocate for greater investment in clean technologies, openness to trade in sustainable goods, and reform in innovation pathways toward ecological resilience. Therefore, the appropriate allocation of green finance to advance the green transition projects becomes fundamental.</p>

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The role of green finance and trade openness on environmental sustainability: new evidence with the load capacity factor

  • Abraham Deka

摘要

The world is experiencing serious environmental problems because of the excessive use of fossil fuel. To this end, the United Nations in the Sustainable Development Goal 13 calls for an urgent action to alleviate climate change and its effects. This research contributes to literature in investigating ways that can be adopted to promote environmental sustainability in the emerging economies that use more polluting energy sources to advance economic growth, through using Turkey as the case study. Therefore, the role of green finance and trade openness in promoting environmental sustainability is investigated, using the load capacity factor as a comprehensive proxy. Unlike prior research that primarily relies on carbon emissions or ecological footprint, load capacity factor integrates both environmental demand and biocapacity supply. Using annual data from 2000 to 2022 and the ‘Autoregressive Distributed Lag’ approach, results indicate that green finance, renewable energy, and trade openness significantly enhance load capacity factor in both short- and long-term. In contrast, economic growth and technological innovation are found to deteriorate environmental quality. Policy implications advocate for greater investment in clean technologies, openness to trade in sustainable goods, and reform in innovation pathways toward ecological resilience. Therefore, the appropriate allocation of green finance to advance the green transition projects becomes fundamental.