Green ODA and Carbon Emissions in Developing Countries: A Dynamic Panel Threshold Analysis Based on Renewable Energy Transition

Green ODA supports renewable energy and low-carbon structural transformation. Limited studies have explicitly evaluated whether Green ODA reduces emissions or examined the structural conditions that enable climate-oriented aid to produce meaningful decarbonisation outcomes. In this study, we examined the relationship between Green ODA and carbon dioxide emissions and investigated whether this relationship differs across the stages of renewable energy transition. Using annual panel data for 63 developing countries selected from the OECD Development Assistance Committee (DAC) List of ODA Recipients, including low-income, lower-middle-income, and eligible upper-middle-income economies, between 2010 and 2021, a dynamic panel threshold regression model was employed, with renewable energy consumption as the threshold variable. Renewable energy consumption was significantly associated with lower carbon emissions. However, the effects of Green ODA varied depending on the level of renewable energy development. The estimated threshold value for renewable energy consumption was 78.2%. When renewable energy consumption remained below this threshold, Green ODA was associated with increased carbon emissions. Following threshold exceedance, the effect became negative, although it remained statistically insignificant. These findings suggest that the relationship between Green ODA and carbon emissions differs across the stages of renewable energy transition in recipient countries.