Vertical financial disparity, energy prices and emission reduction: Empirical insights from Pakistan

Abstract

The economic and environmental aspects of energy production have become important due to the increasing complexity energy sector and envoirnmental pollution, warranting to test the connection between financial imbalances, energy prices and carbon emission. The study aims to test the impact of vertical fiscal imbalances (VFI) on energy prices and carbon emission trends by considering the dual-perspectives of environmental regulation and industrial structure. The empirical outcomes indicated that vertical fiscal imbalances limited the environmental quality of Pakistan. Furthermore, VFI also caused environmental degradation by affecting industrial structure. VFI inhibits the intensity of environmental regulation, promotes the upgrade of industrial structures, both of which cause additional carbon emissions. The study suggest to energy ministries and energy regulation offices to revisit the machinism of energy prices determination and revised machanisim should provide a user-friendly assessment to understand the actual costs associated with the rising concern of environmental pollution. By this, envoirnmental protection maximization and optimal energy conservation is expacted to increase. Based on empirical findings, the study extends the suggestion that vertical fiscal imbalances should be considered an active indicator by the key policy makers and other stakeholders for energy prices determination and environmental quality upgradation.

Testing green fiscal policies for green investment, innovation and green productivity amid the COVID-19 era

“…NEO firms’ expenditure productivity is shaped by macroeconomic trends and firm-specific characteristics. Furthermore, the empirical findings reinforce the idea that clean energy companies will have a positive impact on the economy (Şanlisoy and Çi̇loğlu 2019 ; Li et al 2021a , b , c , d ). With unpredictable government regulations, the investment potential for renewable energy sources is restricted.…”

“…Thus, business mistakes are compensated for by public funds, which corrects them with profits from R&D (Huang et al 2020 ; Li et al 2021d ). One important effect of applying for grants is that it will promote the competitive advantages of technical R&D, causing renewable energy companies to strengthen their technical monopolies, motivating them to spend money on R&D and technology, thus enhancing unexpected profits and increasing performance (Baloch et al 2020 ; Li et al 2021a , 2021b , 2021c ).…”

Impact of Green financing, FinTech, and financial inclusion on energy efficiency

“…The results of this review also have some critical considerations for policymakers who should consider the newly developed developments and be used to plan a powerful strategy in the area of financial management. FinTech offers better ways to heal power generation and energy consumption, new tools to address complex electrical matrices made by small, diverse customers, new investment openings, and new tools to deal with this risk (Li et al 2021a , b ). The FinTech industry also facilitates information attention and dissemination.…”

“…Green financing has a huge impact on energy efficiency. Energy efficiency may be improved through two tactics: distinct policy groups dedicated to achieving energy poverty targets and a complete execution strategy for policies aimed at families with low income through financial inclusion (Li et al 2021a , b ). In other words, governments and politicians should develop regulations to decrease home energy consumption and greenhouse gas releases, and then completely appliance them to mitigate the impact of energy poverty on low-income families.…”

“…It may be anticipated to lower energy consumption or enhance energy efficiency by producing more units with same or low energy quantity. Li et al ( 2021a , b ) have asserted that in LEED projects, it is not acceptable to incorporate normal DEA approaches that are meant for just minimization of contaminants. There are many ways for resolving this problem such as providing incentives in order to drive unwanted behavior.…”