ABSTRACT
This study investigates the effect of issued green bonds and energy price volatilities on Japanese wind, solar, and hydro consumption. We used the Autoregressive distributed lag (ARDL) estimation method proposed by Pesaran, Shin and Smith, on data between 1990 and 2020. Our findings show a long-term positive impact from issued green bonds and energy prices, and no significant short-term impact on solar consumption, albeit a negative impact on wind consumption from geopolitical risk. Japanese issued green bonds have the greatest effect on solar and hydro. There is a causal relationship between green bonds and geopolitical risk on the one hand and renewable energy consumption on the other, and a bi-directional linkage between energy prices and renewables consumption. Policy recommendations include implementing a Japanese green bonds market and establishing digital green financing tools that are resilient in post COVID-19 conditions.
