Asymmetric Impacts of Finance, Energy Use, and Innovation on China’s Carbon Emissions

The tension between economic expansion and climate mitigation necessitates a deeper understanding of how finance, energy demand, and innovation jointly shape carbon emissions in emerging economies. In China, rapid financial deepening, rising energy consumption, and growing research and development (R&D) investment have evolved simultaneously, yet their asymmetric environmental effects remain unclear. This study examines the dynamic and nonlinear relationship between financial development, energy consumption, R&D expenditure, and CO 2 emissions in China over 1990–2022. The baseline model applies a nonlinear autoregressive distributed lag (NARDL) framework, decomposing explanatory variables into positive and negative partial sums to capture asymmetric short- and long-run effects. GDP per capita and trade openness are included as controls, and cointegration is verified through bounds testing. Dynamic multipliers trace adjustment paths, while robustness is assessed using alternative measures of CO 2 emissions (per capita), financial development indicators, definitions of energy consumption, and lag selection criteria. Results show that a 1% increase in energy consumption raises CO 2 emissions by approximately 0.75–0.80% in the long run, whereas reductions yield smaller effects. Financial development increases emissions mainly through expansionary shocks, confirming dominant scale effects. In contrast, a 1% increase in R&D expenditure reduces emissions by about 0.30–0.40%, with insignificant reverse effects. Policy implications include accelerating the phase-down of coal and the deployment of renewables, embedding climate-based credit allocation rules into financial regulation, and institutionalizing sustained R&D expansion to secure long-term emission reductions under asymmetric economic dynamics. • Energy use is the dominant and asymmetric driver of carbon dioxide emissions • Financial development increases emissions mainly through expansionary scale effects • Innovation reduces carbon dioxide emissions in the long run, with stronger effects from increases