DOI: 10.20935/acadenvsci7826 ISSN: 2997-6006

Harnessing innovative financial instruments for robust climate change mitigation in the United States

Benjamin Damoah, Clement Yeboah
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This meta-analysis evaluates the effectiveness of innovative financial instruments in supporting the United States of America’s climate change mitigation efforts. A comprehensive search of peer-reviewed journal articles published between 2010 and 2023 identified 4580 records, with 30 peer-reviewed journal articles meeting the inclusion criteria. The study findings emphasized the significant effect of financial instruments in advocating sustainability. Green bonds significantly boosted renewable energy funding, reducing greenhouse gas emissions by 12–15% and reinforcing their important role in financial clean energy initiatives. Carbon pricing mechanisms, such as cap-and-trade programs, are effective, as they reduce emissions by 10–20% in states with strong, robust regulatory frameworks. These strong policies have established powerful economic incentives for lucrative businesses to combat carbon emissions whilst maintaining a competitive market. Sustainability-linked loans (SLLs) encouraged private investment in low-carbon technologies, and climate funds improved the resilience of vulnerable communities. Entities implementing cleaner practices gained from financial incentives, making these loans more attractive for sustainable development. Also, climate funds enhanced the resilience of at-risk communities, strengthening their adaptation techniques and disaster recovery efforts. However, the success of these instruments depends on transparent governance and consistent policy across federal and state levels. Strengthening the policy framework and enhancing investors’ confidence through transparent reporting are essential to scaling these tools effectively.

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