Effect of green bonds, oil prices, and COVID-19 on industrial CO₂ emissions in the USA: Evidence from novel wavelet local multiple correlation approach

Abstract

This study explores the effect of green bonds, oil prices, and the coronavirus disease 2019 (COVID-19) pandemic on industrial carbon dioxide (CO2) emissions. In this context, this study examines the United States of America (USA), which is the biggest economy in the world, uses weekly data between March 6, 2020 and September 30, 2022, and applies a novel wavelet local multiple correlation (WLMC) approach under time-varying and frequency-varying perspective. The novel empirical findings shows that (i) there is a strong negative (positive) co-movement between industrial CO2 emissions and green bonds in the short-run (long-run); (ii) there is a strong positive (negative) co-movement between industrial CO2 emissions and oil price in the medium-run (long-run); (iii) there is a strong negative (positive) co-movement between industrial CO2 emissions and the COVID-19 pandemic in the medium-run (long-run); (iv) the oil price is the dominant factor, whereas there are changing effect of the variables on each other at different times and frequencies; and (vi) overall, there are long-run asymmetric and dynamic correlations between industrial CO2 emissions and variables. Hence, the empirical results highlight the asymmetric, time-varying, and frequency-varying effects of green bonds, oil prices, and the COVID-19 pandemic on industrial CO2 emissions by presenting fresh and novel evidence. Moreover, the study proposes policy implications for the USA government.

Green bonds in climate finance: A review of USA and African initiatives

“…In the USA, the impact of green bonds on industrial CO2 emissions has been studied, showing evidence of their supporting effect on environmental quality. This highlights the potential of green bonds to contribute to environmental sustainability and mitigate the impact of industrial activities on climate change (Adebayo & Kartal, 2023).…”

“…From the USA, lessons can be learned about the effectiveness of different domestic climate finance mobilization options, including the impact of green bonds on CO2 emissions and the market reaction to green bond issuance (Adebayo & Kartal, 2023;Wang et al, 2020). Additionally, the review of the impact of climate change on economic growth and the application of green finance in mitigation provides valuable insights (Lu, 2022).…”

Quantile-based effect of energy, transport, and total environmental tax on ecological footprint in EU5 countries

“…In the present literature, a variety of proxy indicators for environmental pollution has been used by researchers. Many earlier studies have used CO 2 emissions as a proxy of environmental pollution indicators (e.g., Ulucak et al 2020 ; Adebayo and Kartal 2023 ; Hussain et al 2023 ; Kartal et al 2023 ; Wang et al 2023 ).…”

Towards Achieving Sustainability in the BRICS Economies: The Role of Renewable Energy Consumption and Economic Risk

“…As a result, several nations are shifting their policies toward sustainable growth. This shift can be achieved by using sustainable energy, which researchers, policymakers, and intergovernmental organizations have highlighted [51,52]. Thus, boosting the green/renewable energy percentage in their energy portfolio is suggested.…”