The role of digital finance for the growth of renewable energy: evidence from China.

ABSTRACT

Developing renewable energy (RE) is the inevitable choice for China to achieve its climate goals. However, financing RE investments remains challenging. Meanwhile, China's digital finance (DF) is profoundly influencing the trajectory of the energy transition. This study empirically investigates the role of DF on the growth of RE, what aspects of DF matter, and its geographical attenuation process, taking both spatial and temporal dimensions into consideration. The empirical results show that DF and its coverage breadth and usage depth can facilitate RE development in both local and neighboring regions, with a comparatively limited effect of digitalization level. The impact of DF on the growth of RE is heterogeneous and has been declining over time. Specifically, this effect is observable only in the eastern regions. The spillover effects of DF on RE development vary in different spatial thresholds, which has clear boundary effects and geographical decay characteristics.