A Bibliometric and Literature Review: Alignment of Green Finance and Carbon Trading

Abstract

The issue of climate change is highly related to carbon emissions. One of the practical efforts to reduce carbon emissions is through carbon trading and offset mechanisms. Implementing carbon trading demands massive funding allocation, which requires sustainable financial policy arrangements from the government and the private sector as an instrument to support nationally determined contributions under the Paris Agreement. However, only a few review articles look into the specific combination of green finance (also known as sustainable financing) and the carbon trading mechanism. In this study, we aim to review research on green finance and its association to the emission reduction and carbon trading. We utilized the VOSviewer framework to perform a bibliometric analysis on the Scopus database, and performed search, identification, and screening processes using selected relevant keywords. We obtained 506 articles from 2014 to 2022 related to sustainable finance and carbon trading aspects. Using rigorous bibliometric approaches, we identified both established and recent research clusters for topological analysis, identification of major research subjects, interdependencies, and trends in collaborative effort. The results indicate that there is ample room for additional research to link carbon trading with green finance initiatives or financing, which can improve the success of carbon trading activities.