How does energy aid mitigate the recipient countries' carbon emissions?

As the global community collectively tackles climate change, energy aid has emerged as a potential solution to reduce carbon dioxide (CO2) emissions in recipient countries. However, the impact and underlying mechanisms of energy aid on CO2 emissions remain uncertain. Accordingly, this study empirically examines the influence of energy aid on CO2 emissions. Analyzing data from 65 nations between 2002 and 2020, we find that energy aid contributes to reducing recipients' CO2 emissions. A sectoral heterogeneity analysis reveals that this impact primarily stems from aid related to renewable energy generation and energy policies, highlighting the need to optimize the energy aid structure to improve its effectiveness. Additionally, technical and structural effects are identified as the two primary transmission paths to explore the mechanism linking energy aid and carbon emissions. This study confirms the importance of energy aid in mitigating CO2 emissions and provides recommendations for enhancing aid effectiveness.(C) 2023 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.