Effect of green finance on climate change mitigation in Nigeria
Keywords:
Carbon Credit, Climate Change, Green Bond, Green Finance, Greenhouse Gas Emission, MitigationAbstract
Climate change remains a critical global challenge, with Nigeria facing significant environmental and economic risks due to rising greenhouse gas emissions. Through instruments like green bonds and carbon credits, green finance provides essential funding for climate mitigation, promoting renewable energy, sustainable infrastructure, and policies aimed at reducing carbon footprints. The study examines the effect of green finance on climate change mitigation in Nigeria, addressing the challenges of greenhouse gas emissions and the need for sustainable financial mechanisms. The study employs an ex-post facto research design, covering the period from 2011 to 2023. The study utilised secondary data collected every quarter and sourced from financial and environmental reports. The analysis was conducted using the econometric technique of the Autoregressive Distributed Lag model. The study's findings revealed that green bonds have a positive and statistically significant effect on climate change mitigation in Nigeria. In contrast, carbon credit has a negative but statistically insignificant effect on climate change mitigation in Nigeria. The study concludes that green finance is a viable tool for climate change mitigation in Nigeria, though its full potential remains underutilised. The study recommends strengthening policy frameworks, increasing investment in green financial instruments, and enhancing public-private partnerships to scale up sustainable finance initiatives.
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