Green Finance, Innovation, Agriculture Finance and Sustainable Economic Development: The Case of Indonesia’s Provincial Carbon Emissions

Abstract

Indonesia is struggling with utmost pressure to restrict carbon emissions as it is included in those emerging economies who are recognized as highest carbon emitters. Nevertheless, the Indonesian government is showing remarkable effort to reduce the emissions and set a planned goal to achieve low carbon economy. However, the major reliance on fossil fuels to maintain economic growth is creating obstacles for country. To explore that what tools could be helpful in the scenario to support country’s goal. The study intends to measure the role green finance, innovation, agriculture finance and sustainable economic development in gauging carbon intensity. The paper used two indicators to measure sustainable economic development; GDP per capita and renewable energy consumption. The panel data is used in the study which is extracted from 30 provinces of Indonesia in the time span of 2006-2020. The study used OLS fixed effect model and quantile regression technique to assess the relationship between explained variable and explanatory variables. Findings echo that with the increase in economic growth, carbon intensity also starts increasing. However, green finance, innovation, agriculture finance and renewable energy are significant tools to reduce the emissions. Furthermore, confirmation of findings was done through quantile regression analysis. The paper presents several implications as well on the basis of empirical evidence which are of great help for country.