Energy Transition and Green Economy: macro and microeconomic impacts

What are the impacts of energy transition and green economy on the economy in general and on microeconomy of firms and individual citizens?

Green finance and energy transition have significant impacts on both the macro-economy and microeconomy of firms and individuals:

At the macroeconomic level, green finance plays a pivotal role in underpinning green industries and fostering the progression of a green economy. It directs social capital towards industries prioritizing energy efficiency, low carbon emissions, and environmental friendliness, spurring technological innovation and industrial transformation [1]. The transition to a green economy requires significant resources from both private investors and public policymakers, with important implications for employment and living standards [2].

However, there are contradictions in the impacts at the microeconomic level. While green finance policies aim to promote the green transition of businesses, a study on China's Pilot Zones for Green Finance Reform and Innovations found an unexpected 5.53% surge in PM2.5 concentration levels in the vicinity of firms [3]. This highlights the need for careful implementation and monitoring of green policies.

For individual firms, the impacts are mixed. Green credit policies have significantly promoted the growth of energy firms by reducing financing costs and promoting green innovation, particularly for state-owned firms, large-scale firms, and those in central and eastern China [4]. However, firms in transition economies face challenges in changing their operating knowledge to meet the demands of new market-oriented, environmentally conscious economies [5].

In conclusion, while the overall trend towards a green economy and energy transition is positive for sustainable development, the impacts vary at different levels. Macro-level benefits include technological innovation and industrial transformation, while at the micro-level, firms and individuals may face both opportunities and challenges in adapting to new environmental paradigms. Policymakers must consider these varied impacts to ensure a just and effective transition to a green economy.

References

1.Liu D, Chang Y, Yao H, Kang Y. The impact of green finance on green economy development efficiency: based on panel data of 30 provinces in China. Frontiers in Environmental Science. Frontiers Media Sa; 2023;11.

2.Braga JP, Ernst E. Financing the green transition. The role of macro-economic policies in ensuring a just transition. Frontiers in Climate. Frontiers Media Sa; 2023;5.

3.Luo C, Lyu H, Wen T, Qiang WW, Lee HF. Green finance and grey air: Assessing the impact of green finance pilot zones on company-level pollution in China. Environmental Research Letters. Institute of Physics Publishing; 2024;19.

4.Li C, Feng X, Li X, Zhou Y. Effect of green credit policy on energy firms’ growth: evidence from China. Economic Research-Ekonomska Istraživanja. Taylor & Francis; 2023;36.

5.Kriauciunas A, Kale P. The impact of socialist imprinting and search on resource change: a study of firms in lithuania. Strategic Management Journal. Wiley-Blackwell; 2006;27:659–79.