Green Finance and Renewable Energy Innovation: Addressing Financial Constraints for SDG Achievement in China

Financial constraints significantly constrain renewable energy development in emerging economies, yet the mechanisms by which green finance (GF) influences innovation capacity remain insufficiently quantified. This study examines how financial constraints shape sustainable energy transitions in China, addressing critical gaps in the linkages among economic stability, green financing mechanisms, and technological innovation within the Sustainable Development Goal (SDG) framework. Utilizing provincial panel data spanning 2000–2020 from 30 Chinese regions, the vector autoregression (VAR), generalized method of moments (GMM), and difference‐in‐differences (DID) approaches are employed to establish both dynamic relationships and causal effects. Results demonstrate that the availability of GF has a strong positive effect on renewable energy innovation ( β = 2.08, p < 0.01), with economic stability serving as a significant moderator. Financial constraints reduce innovation capacity by approximately 1.5% per unit decrease in green financing support. We propose a three‐tier policy framework encompassing immediate credit reforms, medium‐term carbon pricing mechanisms, and long‐term public–private partnership infrastructure. These findings advance understanding of the finance‐innovation nexus in energy transitions and provide evidence‐based pathways for achieving SDG 7 (clean energy), SDG 8 (economic growth), and SDG 13 (climate action) in resource‐constrained contexts.