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Under the goal of "carbon peaking" and "carbon neutrality" in China, it is significant to explore whether green finance contributes to carbon emission reduction. Therefore, based on the panel data of 30 provinces in China from 2005 to 2020, this paper empirically examines the impact of green finance on carbon emissions and its mechanism using the FE model, GMM model, DID, and the mediating effect model. Results find that green finance can significantly promote carbon emissions reduction, and this promotion remains still after robustness tests. The heterogeneity analysis shows that green finance's carbon emission reduction effect is more significant in developed and western regions. Moreover, the results of policy intervention effects confirm that green finance reform and innovation pilot zones (GFRIs) for carbon emission reduction are more pronounced than in other regions. Finally, the mediating effects reveal that industrial structure and green innovation are the core transmission channels through which green finance influences carbon emission reduction. These findings offer meaningful implications for formulating reasonable carbon emission reduction plans and determining the future development direction of green finance. [ABSTRACT FROM AUTHOR]

Emissions trading system (ETS) is a cost-effective way towards achieving the carbon neutrality goal. Based on the gaps in the research on carbon allowance allocation vis-à-vis the carbon neutrality target, this study examines how to allocate carbon allowances equitably and effectively among Chinese provinces. Different from the previous research that mainly considers responsibility, ability, and potential of equity dimensions, this paper proposes a composite indicator allocation approach based on the equity of history, demand, contribution, and guarantee, and it also employs the entropy method and expert survey method to obtain the indicator weight values in different scenarios. Results show that the carbon allowances of some provinces, such as the forest-rich province of Yunnan, vary significantly in five scenarios, but little differences are observed for some provinces, such as the high historical emissions province of Shanxi. More provinces achieve data envelopment analysis efficiency in the preferred scenario. Compared with the objective scenario, the required emission reduction in the preferred gross domestic product (GDP) scenario is 231 million tonnes less, and the emission reduction cost is 190 billion yuan less. It is suggested that the Chinese government should adopt the allocation scheme in preference for the GDP scenario. [ABSTRACT FROM AUTHOR]