How government green fund reduce corporate carbon emissions

In the context of developing a diversified green finance system, it is crucial to enhance the innovation of equity-based green financial instruments and accelerate the transition towards sustainable development models. Using tax survey data from 2007 to 2016 and manually collected fund investment data, the study explores the impact of China's Government Green Fund on corporate carbon emissions. The findings show that: (1) Government Green Fund plays a pivotal role in reducing corporate carbon emissions, with a notable decline observed after companies receive investment. (2) The fund generates multiple effects: a resource effect through its synergy with private venture capital; an innovation effect as companies engage in green, low-carbon R&D, both independently and collaboratively; and a structural effect as high-carbon enterprises exit the market and green enterprises expand. Collectively, these mechanisms contribute to significant carbon emissions reduction. (3) The impact of the Government Green Fund on reducing carbon emissions is more pronounced in regions with weaker low-carbon environmental regulations, fewer financial resources, and higher public environmental awareness. This study addresses the limitations of prior research, which has predominantly focused on debt-based financing instruments and supportive industrial policies. Consequently, it provides crucial empirical evidence for accelerating China's development of a modern green finance system and promoting a low-carbon development model.