How does fintech help enhance low-carbon energy transition and promote sustainable economic development in net-zero commitment countries?

Abstract

In recent years, escalating concerns surrounding climate change, carbon emissions, and energy scarcity have spurred international efforts to shift towards sustainable energy solutions. The pivotal role of FinTech in facilitating energy transition and Sustainable economic development stems from its ability to streamline financial processes, improve access to capital for renewable energy projects, and optimize resource allocation. This study addresses a critical void in existing literature by investigating the impact of FinTech on Low-carbon energy transition and sustainable economic growth, presenting fresh perspectives on the FinTech landscape and offering policy recommendations for nations committed to achieving net-zero emissions. Over a decade, from 2012 to 2021, data was gathered from 90 countries dedicated to attaining net-zero carbon emissions, as identified by the Energy and Climate Intelligence Unit. Employing established theories such as sustainable development theory, the green paradox, and the STIRPAT model, the research constructed its analytical frameworks. To mitigate endogeneity, heteroscedasticity, and autocorrelation, Feasible Generalized Least Squares (FGLS) and the two-step system GMM (SGMM) estimator methods were utilized. The study highlights how FinTech advancements in financial systems contribute to sustainable development and energy transition. While the statistical significance of FinTech's impact on energy transition in low-income countries is not strong, regression analysis shows a positive correlation. FinTech is notably associated with Sustainable economic development across all income levels, especially in high and middle-income countries. However, limited data from low-income countries hinders deeper insights into their situation. The study stresses the need for policymakers in developing countries to monitor the growing impact of FinTech on global financial markets. This oversight can help harness FinTech's potential to drive Sustainable economic development, tackling issues like greenwashing and insufficient financial services provision, while aligning with sustainability goals.