Financing the low-carbon transition: green finance, technological innovation, and carbon intensity in Uzbekistan

Abstract

This study examines how green finance and technological innovation are associated with lower carbon intensity in Uzbekistan, addressing rising energy demand, tackling fossil fuel dependence, and supporting sustainable development policies. Using an autoregressive distributed lag framework (1995–2022), carbon intensity [CO2/gross domestic product (GDP)] is modeled as a function of green finance, renewable energy, innovation, and macroeconomic controls. Bounds tests confirm a long-run cointegrating relationship between carbon intensity and the explanatory variables. Empirical results show that green finance, renewables, and innovation are negatively associated with carbon intensity; GDP slightly increases it, while interactions amplify decarbonization effects. Dynamic policy simulations suggest that a coordinated expansion of green financial instruments, renewable energy capacity, and innovation support could lower Uzbekistan’s carbon intensity by roughly one quarter relative to a business-as-usual baseline. These findings offer indicative insights for policymakers on designing integrated green finance, energy, and innovation policies that may support Uzbekistan’s low carbon transition.