Role of green finance in accelerating the transition towards solar energy: Does it really help to achieve COP 29 agenda?

Climate change poses a persistent threat to global sustainability, largely driven by rising carbon emissions from traditional energy sources. Amid growing international consensus on the need for low-carbon transitions, solar energy has emerged as a clean and scalable alternative. However, the high upfront costs associated with solar deployment present serious financial barriers, particularly for developing economies. Against this backdrop, the role of financial enablers such as green finance has become increasingly important in bridging this affordability gap and facilitating cleaner energy pathways. Responding to this urgency, the present study seeks to examine the impact of solar energy on carbon emissions, while also assessing whether green finance strengthens the decarbonization potential of solar adoption. To achieve this objective, the study gathered the data from E7 economies over the period of 2000-2023. Fully Modified Ordinary Least Squares (FMOLS) method was employed to test the proposed relationship among the modelled variables. The outcomes of the study showed that solar energy significantly reduces carbon emissions. Moreover, the presence of green finance amplifies this emission reduction effect of solar energy. Green finance itself have a significant impact in the emission reduction. The findings of the study confirm that green finance act as a significant moderator and strengthens the impact of solar energy in the CO2 reduction. The findings of the study highlight the importance of integrating financial strategies with energy policy to achieve long-term climate goals.