Targeting Low-Carbon: Significance of Green Credit Policy to Reduce Emissions through Structural and Energy Efficiency Pathways in Saudi Arabia

Abstract

This study examines the impact of Saudi Arabia's Green Credit Policy (GCP) on the carbon emissions (CO2) of the listed firms from 2000 to 2024. For econometric purposes, the current study employs ‘a two-way fixed-effects difference-in-differences’ test. It examines the mediating roles of industrial structure upgrading (ISU) and energy intensity (EI), alongside the moderating role of economic development (ED). The findings show that GCP significantly reduces the CO2 and is partially mediated by both ISU and EI. At the same time ED moderation of this relationship has been insignificant. Robustness checks using PSM-DID and placebo tests confirm these findings. The study contributes a firm-level perspective on green finance transmission mechanisms in an oil-dependent Gulf economy. It also offers policy guidance aligned with Vision 2030 and the Kingdom's 2060 net-zero commitment.