Assessing the role of green finance in fostering renewable energy transition and sustainable development in India

Addressing the persistent challenges of CO₂ emissions and fossil fuel dependency is imperative for India to achieve its renewable energy transition goals and 2070 climate neutrality target. Hence, this study examines the drivers of India’s energy transition from 2010 to 2023, focusing on green finance, CO₂ emissions, economic growth, population, and trade openness. Using an autoregressive distributed lag (ARDL) model, the results show that green finance, CO₂ emissions, and trade openness significantly promote renewable energy adoption, while economic and population growth have posed obstacles to seamless transition. Wavelet causality analysis supports these findings, identifying green finance as a catalyst for clean energy. Robustness is confirmed through dynamic ordinary least squares (DOLS). The study highlights green finance as a key enabler of India’s net-zero pathway, underscoring the need for integrated policies that align growth with sustainable investment.