Motivated by the imperative of advancing environmental sustainability through green financing, this study
delves into the transformative impact of technological advancements. Employing a novel, capped call-option
model, this study assesses the interplay between financial technology for sustainable insurance and production
technology for energy saving. This capped option encompasses lending-borrowing elements, including the
financial and production technologies and carbon-allowance transactions within the cap-and-trade mechanism
dedicated to environmental improvement. The investigation underscores the far-reaching effects of stringent
regulatory caps, revealing substantial implications for manufacturing entities’ equity value and risk. Such regulations
may take a toll on borrowing manufacturers, deterring their engagement in energy-saving initiatives for
cleaner production. Furthermore, this study sheds light on the dynamics of energy-saving practices, emphasizing
that both technology-intensive production and financial technologies contribute to manufacturers’ heightened
equity risk. Interestingly, sustainable insurance initiatives, while well-intentioned, might inadvertently hinder
progress in energy saving. Despite both fund providers’ and borrowing manufacturers’ engagement in
technology-intensive solutions for environmental improvement, the findings suggest that prioritizing progress in
technology-intensive production technology for energy saving holds greater promise for advancing cleaner
production. This potential replacement is especially significant for low-carbon emitters compared to their highcarbon
counterparts, highlighting the nuanced dynamics at play in fostering a sustainable and energy-efficient
future.
Relation:
Renewable and Sustainable Energy Reviews 204, 114817
