Financial innovation accelerates the global shift to new energy: Evidence from international research

Background and Motivation

As the world accelerates its transition towards renewable and sustainable energy, the pivotal role of finance in driving this transformation is clearer than ever. From wind and solar to hydropower and biomass, rapid advances in new energy technologies are only possible with robust financial support. Understanding how finance interacts with new energy development—and how financial innovation can promote sustainability—has become a top priority for researchers, investors, and policymakers worldwide.

Methodology and Scope

This special issue brings together eight cutting-edge studies from China, the United States, the UK, France, Singapore, Australia, Norway, Vietnam, Lebanon, and Romania. These papers employ advanced econometric models, network analysis, machine learning, and panel data techniques to explore the multifaceted relationships between finance and new energy development. Topics include risk spillovers, return predictability, convergence of energy and finance, ESG lending, digital finance, carbon emissions, and the effects of green investment intentions in response to online retail investor sentiment.

Key Findings and Contributions

• Dynamic interactions exist between the finance and new energy sectors, with banks generally acting as risk transmitters and new energy firms as risk receivers; these roles can shift during crises.
• Macroeconomic predictors are the most robust drivers of clean energy stock returns, while technical and financial factors gain importance during market volatility.
• ESG lending and tech investment boost banking stability in BRICS economies, particularly in smaller banks.
• Retail investor sentiment online can inhibit or promote corporate green investment intentions at different stages.
• Digital finance significantly reduces household carbon emissions by enhancing financial literacy and promoting more sustainable consumption.
• Emission Trading Systems (ETS) raise the cost of equity for high-carbon firms, especially those with tighter financing constraints.
• There is no overall convergence in energy diversification and financial development among OECD countries; however, “convergence clubs” emerge, influenced by technological progress.

Why It Matters

This collection of research demonstrates that finance is not just a passive enabler but an active driver of new energy solutions. It provides vital capital, shapes risk dynamics, and influences both investor behaviour and corporate strategy. As global climate goals become more ambitious, integrating finance with technological innovation and policy design is essential for a just and efficient energy transition.

Practical Applications

• For policymakers: Design smart, targeted financial instruments (e.g., green bonds, carbon futures, digital finance tools) and align monetary policy with sustainability goals.
• For financial institutions: Prioritise ESG and technology-driven lending for better risk management and social impact.
• For corporations: Enhance information disclosure credibility and leverage new financing channels to promote green investment.
• For researchers and innovators: Explore new frontiers such as asset securitisation for distributed energy, climate risk modelling for insurance, and the financial transmission effects of cross-border carbon mechanisms.

Discover high-quality academic insights in finance from this article published in China Finance Review International. Click the DOI below to read the full-text original!