Financing clean energy projects in different ways

Abstract

Globally, all countries are worried about rising greenhouse gas emissions, it leads environmental degradation,
increase sea level and reduce agriculture output due to large use of traditional energy resource. As a result, international
organizations have begun to pressurize countries to reduce their carbon emissions by increasing the use of clean
energy sources. In such circumstances, this study examines the extent to which foreign direct investment inflows, stock
market capitalization, and research and development expenditures affect clean energy demand in the major investment
countries, spanning the period from 1996 to 2022. The empirical results of long-run elasticities show that foreign direct
investment inflows and research and development expenditures play a considerable role in promoting clean energy consumption.
Further, it is indicated that clean energy consumption has a negative effect on carbon emissions, but a positive
effect on economic growth. Research and development expenditures and foreign direct investment inflows, meanwhile,
have a significant negative impact on CO2 emissions. Based on the results, the study recommends that policy makers in
the major investment countries should understand that it is worth investing research and development expenditures as it
is encouraging the use of clean energy and supporting lower carbon emissions. These empirical findings offer increased
understanding for policy makers, enabling them to utilize research and development expenditures as a tool in the energy
sector for the improvement of environmental quality.