Carbon emission implications of energy transitions in Bangladesh integrating green finance and structural change through a quarterly ARDL approach

Bangladesh, a rapidly developing economy that is highly vulnerable to climate change. The continuous increase in CO 2 emissions requires a strategic policy response to limit emissions to mitigate further climate risk in Bangladesh. Although various studies have investigated the impact of economic activity on environmental degradation, shortcomings continue to exist in looking at the part being played by green finance in minimizing vulnerability. This study aims to investigate how economic growth, green finance, renewable energy consumption, and urbanization influence environmental sustainability in Bangladesh after the implementation of comprehensive green finance guidelines by Bangladesh Bank in 2011. Using multivariate quarterly time series data, the study employs the approach of the autoregressive distributed lag (ARDL) model to establish the relationship between variables of interest. The estimated long-run coefficients reveal that green finance and renewable energy consumption have statistically significant negative effect on CO 2 emissions, underscoring its role in environmental mitigation. Similarly, urbanization also having negative effect on emissions due to service-oriented growth. In contrast, the effects of GDP is found to be statistically insignificant in the long run. The error correction term is negative and significant, validating a stable long-run equilibrium. Short run result indicating positive effect on emission for green finance, renewable energy consum Bangladesh economic growth. The paper concludes with recommendations that Bangladesh should utilize green finance and expand renewable capacity to mitigate carbon emissions in long terms and prioritize investment in renewable energy accordingly.