Green financing through carbon taxation

The purpose of this chapter is to explore the potential of green financing by carbon tax to facilitate Malaysia’s increased renewables investments. To this end, we investigate relations among carbon dioxide (CO₂) emissions and such predictors as changing renewable energy shares, Gross Domestic Product (GDP), population, financial development, carbon pricing, and urbanization. We used dynamic econometric and panel data analyses to determine short and long term of carbon emission elasticities, and ran causality analysis to quantify causal interactions among carbon emission drivers, in Malaysia and other selected Asian states including Indonesia, Singapore, Thailand, the Philippines, and Japan. This chapter responds to the aforementioned argument for a carbon pricing and carbon tax-based policy to effectively reduce carbon emissions and increase renewables investment in an energy transition context.