Carbon markets have emerged as a key policy instrument to combat global emissions by treating greenhouse gases (GHGs) as tradable commodities, encouraging activities that reduce, avoid, or capture emissions. Rooted in the Kyoto Protocol and reinforced by the Paris Agreement, carbon markets operate through compliance (cap-and-trade) and voluntary mechanisms, engaging diverse stakeholders — project developers, verifiers, standard bodies, and credit buyers. These markets foster climate action by enabling companies and individuals to offset their emissions while promoting renewable energy, afforestation, and energy efficiency projects. Technological advancements like blockchain-based carbon credits and tokenization have enhanced market transparency and liquidity. However, challenges persist, including conflicts of interest in project validation, limited participation of small-scale players, and regulatory ambiguities. Strengthening governance, ensuring inclusivity for marginalized groups, and promoting micro-carbon projects are essential for their success. With India’s commitment to achieving net-zero emissions by 2070, carbon markets hold immense potential to accelerate climate goals, driving both environmental sustainability and economic growth. The present article provides a broad understanding of carbon markets, covering their origin and evolution, current status, processes, stakeholders, as well as the lacunae and challenges they face, along with future prospects.
Against the background of the global "dual carbon" goal and the EU Carbon Border Adjustment Mechanism (CBAM), targeting problems such as missing trust in emission reduction and insufficient technological collaboration in cross-border low-carbon supply chains, this paper incorporates blockchain technology, vertical spillover of emission reduction and consumer low-carbon preference into a unified analytical framework. It constructs a two-echelon cross-border supply chain model consisting of a single supplier and a single manufacturer, builds Stackelberg game models under centralized decision-making and decentralized decision-making respectively, comparatively analyzes the optimal emission reduction levels, pricing strategies and profit distributions under two scenarios with and without vertical spillover, and verifies the conclusions through numerical simulation. The research shows that the EU CBAM carbon tax, vertical spillover of emission reduction and consumer low-carbon preference form a positive synergistic incentive, which significantly lifts the supply chain's emission reduction level and overall profit, and the synergistic effect is more prominent under centralized decision-making. A rising emission reduction cost coefficient will restrain enterprises' investment in emission reduction, and vertical spillover will aggravate this restraining effect. Whether vertical spillover is considered or not, centralized decision-making outperforms decentralized decision-making in both emission reduction efficiency and total supply chain profit; the higher the carbon tax rate and vertical spillover rate, the wider the gap between the two. This paper further puts forward management insights from the aspects of enterprise technology sharing, decision-making mode selection and government policy guidance, so as to provide theoretical reference and decision support for cross-border supply chains to respond to CBAM regulations and realize low-carbon transformation.
The U.S. withdrawal from the Paris Agreement represented a pivotal setback in global climate governance, disrupting established funding streams, undermining emission reduction targets, and eroding multilateral trust. This systematic review synthesizes empirical and policy analyses to evaluate the political, economic, and scientific consequences of U.S. disengagement, with particular attention to disparities between developed and least developed countries (LDCs). Findings reveal three critical trends: (1) a substantial decline in reliable climate finance, disproportionately affecting LDCs; (2) weakened accountability mechanisms for major emitters; and (3) increased fragmentation in diplomatic negotiations. This paper argues that COP30 in Brazil (2025) must prioritize decentralized leadership models and robust, equitable climate finance mechanisms to restore momentum. Future research should explore quantifiable metrics for translating global stocktake outcomes into actionable national policies for high-emission economies and assess the efficacy of non-state actors in addressing identified governance gaps.
Abdulkadri Toyin Alabi, Abdulrasaq Mustapha, Lukman Adebayo-Oke Abdulrauf
Purpose This study aims to evaluate the interplay of climate finance, green technologies, and energy transition in shaping environmental sustainability within the MINT economies (Mexico, Indonesia, Nigeria, Turkey), using the load capacity factor (LCF) as a comprehensive ecological indicator. Design/methodology/approach The study adopts the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) approach, capturing periods from 2000 to 2021. The robustness of the findings is subsequently reinforced through the application of Common Correlated Effects Mean Group and Dynamic Common Correlated Effects Mean Group (DCCEMG) estimators. Findings The results reveal that climate finance significantly enhances the LCF, affirming its role in promoting environmental sustainability through targeted investments in renewables. Energy transition exerts a short-term negative impact on LCF, reflecting the “transitional paradox,” where reliance on energies temporarily exacerbates ecological strain. However, green technologies show no statistically significant effects, likely due to fragmented adoption in MINT economies. Lastly, the study explores the U-shaped trajectory proposed by the LCC (load capacity curve) hypothesis and finds that it is not statistically validated for MINT economies. Practical implications Climate finance should prioritize high-impact renewables over transitional fuels to accelerate long-term sustainability. Moreover, energy transition timelines must account for short-term ecological costs; for instance, MINT nations could pair gas flaring reduction with decentralized solar grids to mitigate transitional harm. Policymakers should consider implementing targeted financial instruments to channel investments into sectors with the highest environmental returns. Originality/value This study introduces pioneering contributions to climate finance and sustainability research by developing a first-of-its-kind climate finance index, which captures the pragmatic energy transition strategies of emerging economies by integrating both renewable and transitional fuel investments.
The shift from fossil-based energy systems to renewable sources like solar, wind, and hydro presents both opportunities and challenges for developing countries aiming to expand energy access, promote economic growth, and meet climate goals. This study examines the technological, financial, institutional, and governance aspects of clean energy transitions, focusing on regional disparities and implications for low- and middle-income economies. A systematic review of literature was carried out using the SPAR-4-SLR methodology across Scopus, Web of Science, and Google Scholar. Only peer-reviewed studies published in English from 2009 to 2025 were included, guided by four research questions: (1) technological and resource endowments, (2) capital structuring and financial market dynamics, (3) institutional and policy frameworks, and (4) decentralized, digital energy governance. Search terms were tailored for each theme, and studies were classified by topic, region, and methodology. Results show that decentralized renewable systems—especially solar micro-grids—offer affordable alternatives to fossil fuels in rural and off-grid areas, enhancing job creation, energy security, and poverty reduction. Examples from Kenya, India, and Southeast Asia highlight the importance of policy consistency, financial innovation, and institutional preparedness in promoting clean energy deployment. Still, ongoing challenges such as high initial costs, infrastructure gaps, and limited technical skills continue to hinder progress in many regions. • Institutional and financial factors outweigh resource availability in clean energy. • Local policy tools often outperform broad international frameworks of clean energy. • Blended finance reduces cost barriers in early-stage clean energy projects. • Inclusive planning links clean energy to health and equity gains. • Technology transfer works best with local training and governance support.
The current study undertakes a bibliometric examination to analyze the emerging intersection of green finance and environmental monitoring, two critical areas that are driving the global agenda for sustainability. Based on evidence from the Scopus database and visualization using VOSviewer, the study investigates 20 years of scholarly articles to identify major authors, institutions, countries, and thematic groups. The findings of the research pinpoint a discernible chronological development—early research into pollution detection and environmental monitoring systems giving way to subsequent emphasis on financial tools such as green bonds, sustainable development investments, and decentralized finance. Keyword co-occurrence and overlay visualization show how environmentally pertinent data increasingly is being made part of financial decision-making and policy-making. In addition, the study reveals Chinese, American, Indian, and certain European country regional leadership in terming the story. Findings reveal theoretical and empirical contributions through the convergence of environmental science and financial innovation, as well as discovering limitations towards database scope and metrics by citation. Lastly, the study provides a strategic model for scholars, investors, and policymakers seeking to align environmental intelligence with sustainable finance practice.
Climate governance is entering a period of turbulence, with policy reversals in some democracies and rapid expansions elsewhere. This paper compares how centralized, decentralized (federal), and polycentric/hybrid governance designs shape mitigation and adaptation outcomes. Using a qualitative comparative approach across China, the United States, Canada, Türkiye, Norway, and Saudi Arabia, assessing policy ambition, legal instruments, implementation capacity, subnational authority, stakeholder participation, finance mobilization, and equity considerations. A qualitative comparative approach is applied across six country cases - China, the United States, Canada, Türkiye, Norway, and Saudi Arabia - evaluating policy ambition, legal instruments, implementation capacity, subnational authority, stakeholder participation, finance mobilization, and equity considerations. Insights are then extended to the Central Asian context, where climate governance remains predominantly centralized, shaped by Soviet-era institutional legacies, uneven local capacity, and constrained civic participation. The analysis demonstrates that no model is universally superior; the most effective arrangements combine top-down coherence with bottom-up experimentation and social legitimacy. Norway’s polycentric governance model and Türkiye’s hybrid approach illustrate how localized climate planning can be integrated within broader national frameworks. For Central Asia, pragmatic hybrid pathways are recommended that align national targets and financing with empowered regional pilots, transparent monitoring, and inclusive engagement. These context-sensitive combinations offer the best prospects for durable emissions reductions, climate resilience, and just transition outcomes in the region.
With the global emphasis on sustainable development, green finance has emerged as a critical driver for balancing economic growth and environmental protection. Decentralized financial instruments (DeFi), leveraging unique technological advantages and operational mechanisms, are reshaping the traditional risk transfer logic of banks in the green finance sector. This paper explores the core characteristics of decentralized green financial instruments and their applications in green bonds, carbon trading, and other domains. Through a combination of theoretical analysis and case studies, it details how these instruments reconstruct traditional risk transfer pathways, alter risk-sharing models, and influence banks' risk management systems and financial market stability. By providing insights for banks to optimize risk management strategies in the new financial ecosystem, this study highlights the transformative role of decentralized green financial instruments in reshaping the landscape of financial risk management and their promising future developments.
Emma Verónica Ramos Farroñán, Gary Christiam Farfán Chilicaus, Luís Edgardo Cruz Salinas, Liliana Correa Rojas · 8 authors
This systematic review synthesizes evidence on economic instruments that mobilize renewable-energy investment in emerging economies, analyzing 50 peer-reviewed studies published between 2015 and 2025 under PRISMA 2020. We advance an Institutional Capacity Integration Framework that ties instrument efficacy to regulatory, market, and coordination capabilities. Green bonds have mobilized roughly USD 500 billion yet work only where robust oversight and liquid markets exist, offering limited gains for decentralized access. Direct subsidies cut renewable electricity costs by 30–50% and connect 45 million people across varied contexts, but pose fiscal–sustainability risks. Carbon pricing schemes remain rare given their administrative complexity, while multilateral climate funds show moderate effectiveness (coefficients 0.3–0.8) dependent on national coordination strength. Bibliometric mapping with Bibliometrix reveals three fragmented paradigms—market efficiency, state intervention, and international cooperation—and highlights geographic gaps: sub-Saharan Africa represents just 16% of studies despite acute financing barriers. Sixty-eight percent of articles employ descriptive designs, constraining causal inference and reflecting tensions between SDG 7 (affordable energy) and SDG 13 (climate action). Our framework rejects one-size-fits-all prescriptions, recommending phased, context-aligned pathways that progressively build capacity. Policymakers should tailor instrument mixes to institutional realities, and researchers must prioritize causal methods and underrepresented regions through focused initiatives for equitable global progress.
The foundations of successful European Union policies and current initiatives on the adaptation of the energy sector to climate change, aimed at transforming Europe into a climate-neutral continent by 2050, are considered. A comprehensive analytical approach is proposed, consisting of regulatory, political and institutional analysis and elements of content analysis of EU strategic documents in the field of climate and energy, in particular the European Green Deal (2019), the EU Climate Law (2021), the "Fit for 55" Package (2021), the RED II / RED III Directive, the Energy Efficiency Directives (EED). Analysis shows that to achieve climate neutrality in the EU, a reduction of greenhouse gas emissions by 55 % by 2030 (compared to the 1990 level) is envisaged; increasing the share of renewable energy sources − up to 42.5 % by 2030; increasing energy efficiency − reducing total energy consumption by 11.7 % by 2030. The EU has developed the main policy directions for adapting the energy sector to climate change, in particular: integrating adaptation into energy policy (planning) at all levels; development of sustainable energy infrastructure (modernization of networks, decentralization of energy, investment in "smart grids"); development of renewable energy sources; financing and support for research; cooperation at the national and regional levels; monitoring and vulnerability assessment. Analysis of EU legislation in the fields of climate and energy indicates the functioning of a complex system of interconnected regulatory acts, which shapes European energy policy within the framework of the European Green Deal. This is what should become the basis for Ukraine's formation of its green deal, which has recently initiated. Keywords: energy sector, climate change, risk, adaptation, public policy, European Union.
Yasir Habib, Noor Raida Abd Rahman, Shujahat Haider Hashmi, Minhaj Ali
Carbon neutrality and sustainable development goals have become globally imperative, as evidenced by the Paris Agreement, and the Nationally Determined Contributions mechanism. At the recently ended COP28 climate summit, the majority of the participating countries encountered these challenges through financial commitments to attain their objectives of carbon neutrality for sustainable development. Green finance and environmental decentralization play key roles in realizing these targets. The core focus of this study is to demystify the impacts of green finance and environmental decentralization on sustainable development by employing a panel dataset comprising 44 OECD countries, spanning 1995-2022. Ecological footprint serves as an indicator of sustainable development. Financial investment directed towards climate change mitigation and climate change adaptation technologies with alternative output-input green finance indicators are used as measures for green finance. A new index was devised that incorporates multiple indicators of environmental decentralization to gauge its influence on sustainable development. Using OLS, Oster coefficient stability, Lewbel 2SLS, and Kiviet instrumental variable techniques, our findings demonstrate that green finance significantly enhances sustainable development across countries. The empirical findings reveal that green finance and environmental decentralization exhibit a positive, statistically significant influence on sustainable development in OECD countries, while also playing a mitigating role in the reduction of environmental degradation. Considering these findings, it is imperative that OECD countries formulate and implement policies that foster green financing and empower local governments. This formulation and authorization are crucial for reducing pollution through the stimulation of innovation in climate change mitigation and adaptation technologies. In doing so, these policies will substantially reinforce the achievement of the United Nations' Sustainable Development Goals 9 and 12.
The Carbon platform introduces an innovative paradigm in carbon emissions management by integrating advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), and Blockchain. This decentralized system automates the processes of carbon credit issuance, verification, and trading, leveraging smart contracts and IoT sensors to ensure transparency and accuracy. Furthermore, by utilizing a Decentralized Autonomous Organization (DAO) structure, the platform enhances stakeholder involvement through community-driven governance, thereby elevating the standards for carbon credit management.
• “Incentive-regulatory” policy synergy promotes energy transition but falls short of “1 + 1 > 2” expectations. • policy synergy’s marginal effect is lower than standalone incentive policy due to institutional conflicts. • Transmission mechanisms (industrial/financial/cognitive) exhibit significant attenuation under policy synergy. • policy synergy effectiveness hinges on city attributes: stronger in high-capacity, non-resource-dependent cities. • Top-down institutional integration is critical to resolve “instrumental tension” in multi-policy governance. Accelerating the energy transition (ET) is essential for achieving climate goals, yet the effectiveness of combining multiple policy instruments remains uncertain. This study investigates the synergistic effects of China’s New Energy Demonstration Cities (incentive policy) and Key Air Pollution Control Zones (regulatory policy) on urban ET from 2011 to 2021. A multidimensional ET index is constructed under the “energy trilemma” framework, and a double machine learning approach is employed to identify causal impacts and mediating mechanisms. The results show that: (1) policy synergy significantly promotes ET, but its marginal effect is lower than that of the incentive policy alone, failing to achieve the expected “1 + 1 > 2” outcome; (2) Heterogeneity analysis reveals that the synergy effect is more pronounced in cities with stronger economic foundations, higher fiscal decentralization, non-resource dependency, and non-old industrial base status, highlighting the role of local institutional carrying capacity; (3) Mechanism analysis further indicates that synergy promotes ET mainly through industrial upgrading, green finance, and public environmental awareness, but all pathways suffer from transmission attenuation. These findings underscore the challenges of fragmented governance in multi-policy environments and suggest that effective energy transition requires stronger institutional integration, clearer policy signals, and enhanced local implementation capacity.
This chapter explores the integration of Environmental, Social, and Governance (ESG) principles into legal and financial frameworks to promote sustainable development, focusing on Kerala, India. Drawing on qualitative insights and policy analysis, it examines Kerala's decentralized governance model, legal mandates, and financial strategies supporting ESG adoption. It highlights mechanisms such as green finance legislation, ESG-based credit ratings, and sustainable investment practices. Challenges such as non-standardized ESG metrics and risks of greenwashing are identified alongside opportunities for digital innovation and regulatory reform. The chapter contributes both theoretical depth and practical tools for subnational ESG implementation, offering guidance for policymakers, academics, and financial institutions.
Juan D. Saldarriaga-Loaiza, Johnatan M. Rodríguez‐Serna, Jesús M. López‐Lezama, Nicolás Muñóz-Galeano · 5 authors
The integration of non-conventional renewable energy sources (NCRES) plays a critical role in achieving sustainable and decentralized power systems. However, accurately assessing the economic feasibility of NCRES projects requires methodologies that account for policy-driven incentives and financing mechanisms. To support the shift towards NCRES, evaluating their financial viability while considering public policies and funding options is important. This study presents an improved version of the Levelized Cost of Electricity (LCOE) that includes government incentives such as tax credits, accelerated depreciation, and green bonds. We apply a flexible investment model that helps to find the most cost-effective financing strategies for different renewable technologies. To do this, we use three optimization techniques to identify solutions that lower electricity generation costs: Teaching Learning, Harmony Search, and the Shuffled Frog Leaping Algorithm. The model is tested in a case study in Colombia covering battery storage, large- and small-scale solar power, and wind energy. Results show that combining smart financing with policy support can significantly lower electricity costs, especially for technologies with high upfront investments. We also explore how changes in interest rates affect the results. This framework can help policymakers and investors design more affordable and financially sound renewable energy projects.
China’s reliance on fossil fuels significantly hinders its transition to a low-carbon deconomy, requiring comprehensive carbon reduction strategies. In response, Green Finance Reform and Innovation Pilot Zones (GFRIPZ) policy was introduced in 2017 to promote green development through supply-side financial reforms and innovations. This study examines the impact of GFRIPZ on urban carbon unlocking (UCU) using a difference-in-differences (DID) model with panel data of 272 Chinese cities. Heterogeneous effects, mechanisms and the moderating effects of fiscal decentralization and digital finance are further explored. The results show that (1) GFRIPZ significantly promotes UCU; (2) The effect is stronger in Guangdong and Zhejiang pilot zones, as well as in eastern, larger, more open, non-resource-based and non-old industrial cities; (3) The policy enhances UCU through green technology innovation, government strategic leading, and social green habit; (4) Fiscal decentralization and digital finance positively moderate the impact of GFRIPZ on UCU independently and jointly. These results highlight the role of GFRIPZ in accelerating UCU and provide insights for sustainable urban development.
Energy poverty remains a pressing challenge in low-income regions, particularly in sub-Saharan Africa, South Asia, and Latin America, where over 733 million people lack access to electricity. Centralized grid expansion has failed to bridge this gap due to high infrastructure costs, technical inefficiencies, and vulnerability to climate-induced disruptions. Decentralized renewable energy (DRE) systems, including solar mini-grids, wind microgrids, biomass energy, and micro-hydro solutions, present a cost-effective, climate-resilient, and scalable alternative that leverages locally available resources. However, DRE adoption is hindered by financial constraints, weak regulatory frameworks, and fragmented policy implementation. This study employs a scoping review and comparative case study approach to assess the effectiveness of DRE solutions in expanding energy access, enhancing climate resilience, and fostering economic development in low-income regions. Case studies from Kenya’s solar-wind hybrid mini-grids, Rwanda’s pay-as-you-go (PAYG) solar expansion, Ethiopia’s biomass and biogas systems, Nigeria’s off-grid solar initiatives, and South Africa’s community-led wind energy projects reveal that DRE systems significantly reduce reliance on fossil fuels, improve local economic stability, and mitigate the impact of climate variability. However, key gaps persist in long-term resilience assessments, cross-sector policy harmonization, and the comparative viability of different DRE technologies. The study underscores the need for integrated policy frameworks, innovative financing mechanisms such as green bonds and PAYG solar, and governance models that facilitate equitable energy transitions. Scaling DRE is critical for achieving sustainable development, climate adaptation, and energy equity in low-income regions.
The United Nations (UN) plays a pivotal role in addressing climate and economic governance through initiatives like the United Nations Conference on Trade and Development (UNCTAD) and the Paris Agreement under COP conferences.While the UN promotes international cooperation and sustainable development, challenges persist regarding the alignment of its strategies with the socioeconomic realities of underdeveloped nations.This article critically examines the role of the UN in climate and economic governance, emphasizing its impacts on national sovereignty, transparency in climate financing, and the practical implementation of global initiatives in the Global South.Key issues such as outdated agricultural methods, pollution from heavy metals and microplastics, and limited infrastructure in underdeveloped regions are analyzed.Solutions proposed by environmental advocates like Dr. Robert O. Young and political leaders such as Robert F. Kennedy Jr. and Donald J. Trump are explored, including detoxification strategies, decentralized approaches to environmental governance, and flexible emission reduction policies.The paper advocates for a balanced, region-specific approach to climate governance that prioritizes local empowerment, tangible solutions to pollution, and transparency in climate financing while respecting national autonomy.