Green Finance and the Economics of Clean Energy Transitions for Sustainable Development
Abstract
Green finance has become an important mechanism for aligning capital allocation with clean-energy transitions and sustainable development. This structured integrative review synthesizes 84 substantive journal articles published between 2002 and 2025, supported by three methodological sources. Literature was identified through Scopus, Web of Science, and Google Scholar searches conducted in June–July 2026 and synthesized narratively across six themes: green-finance instruments and market pricing; cost of capital and project finance; policy and risk allocation; financial development and digital finance; directed technological change; and sustainable-development outcomes. Of the 84 substantive studies, 44 were published from 2020 onward, representing 52.4% of the evidence base. The review finds that green bonds can mobilize capital and support investment and innovation, although pricing advantages vary with issuer quality, verification, market conditions, and use-of-proceeds credibility. Financing costs are strongly associated with renewable-energy deployment, particularly in developing economies where macroeconomic and project risks can constrain investment. Stable policy, risk-sharing mechanisms, financial development, and digital access are generally associated with improved investment conditions, while carbon pricing and renewable-energy support can influence the direction of technological innovation. Evidence on economic growth and sustainable-development outcomes remains heterogeneous across countries, institutional settings, and empirical methods. Overall, green finance appears most effective when financial additionality is linked to measurable environmental performance, technological learning, broader access to capital, and credible governance. The review provides an integrated framework linking financial instruments, investment conditions, transition outcomes, and sustainable-development effects across diverse national contexts.