Global Trends of Carbon Finance: A Bibliometric Analysis

Abstract

Based on the Web of Science core database, this paper used bibliometric analysis to analyze 4408 academic works related to carbon finance from 1992 to 2021. This work shows that the number of publications on carbon finance-related research has increased rapidly; the Journal of Cleaner Production is the most productive journal. China boasts the most significant number of publications, while the United States has the most intensive cooperation with other countries. The Chinese Academy of Sciences is the most productive and influential independent institution, and Chinese authors make up the highest proportion of the top 20 most prolific authors. We can summarize the main research directions in carbon finance through keyword analysis: carbon capture, economic growth, carbon sequestration, financial development, modeling, and carbon price forecasting. Research related to the impact of energy consumption, renewable energy, and urbanization on carbon emissions may become a hot spot for future research in carbon finance. Through an in-depth analysis of the development over the past 30 years and future trends of carbon finance, this paper can provide some reference for future research, which is of great significance in promoting carbon emission reduction.

1. Introduction

Since the pre-industrial era, greenhouse gas emissions from human activities have significantly increased [1], contributing to climate change, a global issue. Climate change is affecting all regions of the planet and causing increasingly severe ecological consequences, such as extreme weather, severe droughts, and forest fires [2]. With the potential to cause substantial population displacement, climate change will progressively and adversely affect environmental degradation and environmentally dependent socio-economic systems [3]. Therefore, addressing climate change and transitioning to a low-carbon economy are essential for all governments to consider. Numerous governments have adopted climate policies to address this issue.

The United Nations Framework Convention on Climate Change (UNFCCC) in 1992 and the Kyoto Protocol in 1997 are significant [4]. As a result of these two conventions, the innovative concept of carbon finance emerged. In 2015, the parties to the UNFCCC adopted the Paris Agreement and set out how to tackle climate change after 2020 [5,6]. China and the United States ratified the Paris Agreement at the G20 Hangzhou Summit in 2016, marking the start of a new global era in controlling carbon emissions [7]. In addition, more and more countries are becoming involved in carbon-neutral actions to mitigate climate change. In 2021, the UNFCCC’s COP26 concluded negotiations on the implementation rules of the Paris Agreement, laying the foundation for its full and active deployment. Over one hundred countries have submitted updated climate commitments since then [8]. It is imperative to address climate change and mitigate greenhouse gas emissions promptly, with the development of a low-carbon economy being absolutely critical. Carbon finance has become a critical component of the green economy’s development, as it is required to fund renewable energy and green energy initiatives [9]. Currently, there is no uniform definition of carbon finance. Instead, the concept can be broadly categorized into two distinct classifications—a narrow and a broad definition. In a general sense, carbon finance refers to financial instruments and approaches that address climate issues through market-based instruments in a carbon-constrained society [10], while in a narrow sense, it is a collective term for the various cash flows obtained from selling project-based greenhouse gas emission reductions or trading carbon permits [11]. Additionally, it also refers to financial activities that promote carbon emission reductions (CERs), such as investment and financing for CERs and carbon emissions trading (CET) [12]. While there are slight differences in the definition of carbon finance for researchers, it is essentially a policy tool to reduce carbon emissions. With global climate change, it has become increasingly crucial to promote the development of carbon finance, and, as a result, many countries are undertaking emissions reduction initiatives.

Currently, micro studies on carbon finance conducted by researchers are typically categorized into three distinct areas. Firstly, there is an analysis of the regulations and operations involved in carbon emission trading markets, which includes examining the process of market development [7,13], as well as designing market mechanisms [14,15,16]. Secondly, these studies focus on the pricing and factors that influence carbon emission rights and their derivatives [17,18,19,20]. Lastly, research delves into the risks associated with the carbon market, encompassing policy, price, and market risks [21,22,23,24].Undoubtedly, research on carbon finance is increasingly receiving attention and many studies have been conducted. Most experts have concentrated on empirical and qualitative studies, including some review articles. Despite the three-decade development of this discipline, few scholars have conducted quantitative studies of the literature on carbon finance to answer important questions such as: (1) How has carbon finance evolved over the last 30 years? (2) Which journals and authors are the most representative in the carbon finance field? (3) Which country or institution is most actively involved in this field? How do countries cooperate with each other? (4) What are the current research frontiers and hotspots on carbon finance? The justification for the research stems from the significant growth of the carbon finance market over the years and the increasing interest in sustainable financing solutions. Quantitative analysis of carbon finance literature can aid in identifying gaps in the existing literature, exploring the main factors that drive the development of carbon finance markets, and assessing the effectiveness of carbon finance mechanisms in incentivizing the reduction of emissions. By analyzing the quantitative data from the literature, this research can contribute to the development of more efficient and effective carbon finance mechanisms and strategies, which could in turn encourage global efforts towards a more sustainable and carbon-free future.

The purpose of this study is to perform a quantitative and qualitative analysis of 4408 publications on carbon finance from 1992 to 2021. By using bibliometric and descriptive statistical methods, we aim to characterize publication trends, the most prolific journals, authors, countries, and institutions in this field. Additionally, we utilize CiteSpace software to visualize the collaborative networks between countries and institutions. The objectives of this research are to (1) identify the key characteristics of literature in the carbon finance field; (2) recognize the representative journals and authors in this area; (3) identify the countries that have played a significant role in advancing carbon finance research; (4) indicate the countries that have contributed to the development of carbon finance; (5) suggest future research directions and trends in carbon finance.

2. Data Sources and Methods

2.1. Data Sources

This paper utilizes the Science Citation Index Expanded (SCI-E) and Social Science Citation Index (SSCI) databases of the Web of Science Core Collection. To avoid the impact of irrelevant occurrence, we used the Title retrieval on 14 April 2022, with the search formula (TI=(carbon finan*) OR TI=(carbon trad*) OR TI=(carbon pric*) OR TI=(carbon econom*) OR TI=(carbon asset*) AND DT=(Article OR Review) AND LA=(English)) AND (DT==(“ARTICLE” OR “REVIEW”)). A total of 4408 documents were collected from 1 January 1992 to 31 December 2021. The document search and selection procedure is illustrated in Figure 1.

2.2. Methods

2.2.1. Bibliometric Analysis

Bibliometric analysis can be used to systematically analyze and evaluate academic literature in a specific discipline through statistical or quantitative methods, utilizing various indicators to describe the characteristics and the trends of the discipline, such as citations, impact factor and co-citation analysis. This method has been widely applied as an important tool for evaluating academic achievements and measuring the performance of disciplines. There are two primary applications for bibliometric approaches: performance analysis and scientific mapping [25]. Scientific mapping tries to expose the structure and dynamics of scientific areas, whereas performance analysis was designed to assess individuals and institutions’ research and publication performance [26]. Therefore, this paper applies bibliometric analysis to analyze the literature on carbon finance in the Science Citation Index Expanded (SCI-E) and Social Science Citation Index (SSCI) from 1992 to 2021.

2.2.2. CiteSpace

This paper utilizes version 5.8 R3 (64-bit) of the CiteSpace software to map national and institutional collaborations and related research hotspots in carbon finance. It shows the structure and distribution of scientific knowledge in scientometrics, data analysis, and information visualization, allowing researchers to create various forms of knowledge maps and visual references to literature mapping [27].

3. Results

3.1. The General Analysis

Figure 2 demonstrates the quantity of publications linked to carbon finance recognized by WOS over the previous 30 years. The histogram and curve depict the number of publications and citations. Since the inception of the Kyoto Protocol in 2005, there has been a clear upward trend in the number of articles. In 2010, the number of published articles on carbon finance surpassed 100 for the first time. Subsequently, in 2015, over 200 articles were published within a single year. In contrast to the prior gradual and consistent pattern of growth, the number of pertinent articles has burgeoned rapidly since 2015, indicative of a significant escalation in academic awareness of carbon finance subsequent to the Paris Agreement. In 2020, the amount of literature in this field increased by 43% per year, owing to the requirements of carbon neutrality and carbon peaking; the number of citations increased by 51%. An increasing number of studies indicates that the field of carbon finance is in its formative years and has excellent potential for growth. At the same time, it is drawing growing attention.

We build upon previous research [28] to devise an exponential model, presented below, for estimating the amount of citations and publications:

$$F\left(t\right)=a\times e^{b\times (t-1992)}+c$$

In the formula, $F\left(t\right)$ represents the cumulative amount of literature accumulated in the year $t$; $b$ signifies the continuous growth rate of literature, which is the ratio of accumulated literature in each year to the total accumulated literature in the previous year; $t$ denotes the time period in years; $a$ and $c$ are parameters. Figure 3 displays separate fitting for the number of publications and the number of citations regarding carbon finance literature over the past thirty years. As shown in the left panel, the fitted curve represents the number of publications ($f\left(t\right)=0.58\times e^{0.25\times \left(t-1992\right)}+17.08,R^2=0.995,p<0.001$), while the right panel shows the fitted curve for the number of citations ($g\left(t\right)=2.81\times e^{b\times \left(t-1992\right)}+198.58,R^2=0.997,p<0.001$), both indicating efficient model fitting. A predicted estimation of roughly 1066 articles and 41,688 citations is expected for 2022.

3.2. Top Journals

From 1992 to 2021, 930 journals published publications about carbon finance.

Table 1. Top 10 active journals in terms of linked works.

Journal Name	TP	%/4408	TC	TC/P	h-Index	IF
Journal of Cleaner Production	290	6.58%	8023	27.67	49	11.016
Energy Policy	213	4.83%	11,006	51.67	55	7.88
Environmental Science and Pollution Research	175	3.97%	2504	14.31	26	5.053
Sustainability	162	3.68%	1472	9.09	21	4.089
Energy Economics	115	2.61%	4042	35.15	33	9.489
Applied Energy	106	2.41%	4494	42.40	39	11.268
Energy	106	2.41%	3397	32.05	33	8.234
Energies	91	2.06%	705	7.75	14	3.333
Science of The Total Environment	76	1.72%	2214	29.13	24	10.237
Climate Policy	68	1.54%	1301	19.13	18	5.906

Note: Total publications (TP) is the overall number of publications; percent is the ratio of one journal’s publications to the total number. TC stands for total citations in a journal. TC/P: a journal’s average number of citations per paper; Hirsch established the h-index in 2005 [29]; IF:5-year impact factor, based on data from the 2021 edition of Web of Science’s Journal Citation Report.

lists the top 10 journals, with 1402 published papers accounting for 31.81 percent of all articles and 35.04 percent of all citations. In general, these magazines publish articles on energy, environmental science, and economics. This suggests that carbon finance is an intersection of economics, energy, and environmental science in the background of climate change.

The Journal of Cleaner Production has a leading position in this field with the most productive publications (290) and an impact factor (11.016) that exceeds that of other papers sampled. Consequently, it has had a substantial impact on this field. In terms of the TC/P score, Energy Policy has the highest TC/P score (51.67), followed by Applied Energy (42.40), Energy Economics (35.15) and Energy (32.05), all of which have impressive impact factors and h-index. Thus, these journals hold a position of eminence and a commendable reputation in the realm of carbon finance.

3.3. Top Authors

Table 2. Top 20 productive authors in terms of relevant publications.

Author	Affiliation and Country	TP	TC	TP/C
Wei YM	Beijing Institute of Technology, China	24	1240	51.67
Lin BQ	Xiamen University, China	22	567	25.77
Wang Q	China University of Petroleum, China	21	828	39.43
Long RY	China University of Mining Technology, China	15	363	24.2
Chen H	China University of Mining Technology, China	14	278	19.86
Anser MK	Xi An University of Architecture Technology, China	13	167	12.85
Kirikkaleli D	Lefke Avrupa University, Cyprus	13	291	22.38
Wang SY	Chinese Academy of Sciences, China	12	218	18.17
Zaman K	King Saud University, Saudi Arabia	12	347	28.92
Fan Y	Chinese Academy of Sciences, China	12	637	53.08
Zhu BZ	Beijing Institute of Technology, China	12	678	56.5
Li J	Chinese Academy of Sciences, China	11	151	13.73
Liu Y	Chinese Academy of Sciences, China	11	403	36.64
Shahbaz M	Beijing Institute of Technology, China	11	658	59.82
Zhang YJ	Hunan University, China	11	921	83.73
Sun W	North China Electric Power University, China	11	193	17.55
Chevallier J	IPAG Business School, France	9	259	28.78
Wang P	Beijing Institute of Technology, China	7	364	52
Ahmad M	Zhejiang University, China	7	166	23.71
Wu J	Chinese Academy of Sciences, China	6	118	19.67

displays the top twenty most productive authors in the field of carbon finance. According to the table, Wei YM from Beijing University of Technology (24 articles), Lin BQ from Xiamen University (22 articles), and Wang Q from China University of Petroleum (21 articles) are the three most productive authors in this field. They are followed by Long RY (15) and Chen H (14) from the China University of Mining and Technology. Meanwhile, the most influential authors are Wei YM from Beijing University of Technology, China and Zhang YJ from Hunan University, with 1240 and 921 citations, respectively, yet the latter has a much higher TC/P value than the former. It is worth noting that 17 of the top 20 authors are from China, with the rest coming from Cyprus, Saudi Arabia, and France. This is evidence that China is the country that carries out the most research on carbon finance. Overall, the top 20 authors contributed 5.76% of all articles (254 articles) and 7.92% of all citations (8847 citations).

3.4. Country and Institution Analysis

3.4.1. Quantity of Articles and Citations

As shown in

Table 3. Top 10 productive countries in terms of relevant publications.

Country	TP	TP R (%)	TC	TC/P
China	1812	1 (41.11)	37,335	20.60
USA	809	2 (18.35)	27,114	33.52
England	396	3 (8.98)	13,955	35.24
Australia	291	4 (6.60)	10,224	35.13
Germany	245	5 (5.56)	4965	20.27
Canada	175	6 (3.97)	4036	23.06
Spain	147	7 (3.33)	3107	21.14
France	139	8 (3.15)	7247	52.14
Netherlands	129	9 (3.09)	4801	35.30
India	124	10 (2.93)	2437	18.89

Note: Total publications (TP) is the total number of publications for a country. R: rank; %: proportion of a country’s publications to total publications; Total citations (TC): the total number of citations for a country; TC/P: a country’s average number of citations per paper.

, the articles in the sample are from 108 nations across the globe, demonstrating that over half of the world’s 197 countries, mainly in Asia, Europe, the Americas, and Oceania, have published on carbon finance. The top ten most active countries are displayed in Table 3. Five of them are in Europe, two in the Americas, two in Asia, and one in Oceania. China’s is the most productive country, with 1812 articles accounting for 41.11% of all publications, followed by the US (809) and the UK (396). China is a leader in terms of total publications and total citations, highlighting its importance in this field.

Considering the TC/P values, France (52.14), the Netherlands (35.30), and the UK (35.24) have the highest values, which are the result of several outstanding articles [30,31,32]. These few European countries play an essential role in their overall body of work. They are followed by Australia (35.13), the USA (33.52), and Canada (23.06). It is worth noting that the two Asian countries, China (20.60) and India (18.89), have relatively low TC/P values. Although the average number of citations in China falls below the worldwide level, its rate of growth far surpasses other nations, and its international influence is rapidly increasing.

Figure 4 reveals a time trend analysis for the five most productive countries from 1992 to 2021. There is a significant growing trend in the quantity of publications in all countries, and most all countries had a rise in the number of publications in 2020. In particular, the US was an early pioneer in carbon finance and took a top place from 1992 to 2013. However, China did not get involved in this field until 2003 and only reached a peak in 2010. After that, the number of publications declined due to the controversial issue of continuing the second commitment period of the Kyoto Protocol. Additionally, the number of publications increased from 2012 onwards, with an exponential increase after 2017. The number of publications in China is now much higher than that of other countries, and there is a gradual shift from high quantity to high quality.

Table 4. Top 10 productive institutions in terms of relevant publications.

Institution	Country and Region	TP	TC	TC/P
League of European Research Universities Leru	Europe	207	8250	39.86
Chinese Academy of Sciences	China	180	6282	34.90
North China Electric Power University	China	121	3217	26.59
Beijing Institution of Technology	China	97	4081	42.07
Tsinghua University	China	95	2841	29.91
United States Department of Energy (Doe)	USA	74	3785	51.15
China University of Mining Technology	China	64	1183	18.48
University of California System	USA	63	1831	29.06
University of Chinese Academy of Science CAS	China	62	1422	22.94
University of London	England	60	1735	28.92

Note: TP stands for total publications for an institution; TC stands for the total citations for an institution; TC/P stands for average number of citations per paper for an institution.

shows the top 10 most productive institutions in carbon finance from 1992 to 2021. Among the top 10 research institutions, six come from China, two from the US, and the rest from Europe. This reaffirms the importance of China in carbon finance-related research. The League of European Research Universities Leru tops the list with 207 publications and 8250 citations, while other institutes with numerous publications include the Chinese Academy of Sciences (180), North China Electric Power University (121), Beijing Institution of Technology (97), and Tsinghua University (95). The Chinese Academy of Sciences is the independent research institution with the highest number of publications and citations. The Beijing University of Technology has a high TC/P of 41.1, mainly due to the large number of citations received by two articles [33,34]. The second-largest contributor to carbon finance research is the United States, with two institutions (ranked 5th and 8th). The US Department of Energy has a TC/P of 51.15, owing to an article published in 2007 in the “Proceedings of the National Academy of Sciences of the United States of America” titled “Contributions to accelerating atmospheric CO₂ growth from economic activity, carbon intensity, and efficiency of natural sinks.” The article [30] is credited with the high TC/P figure of 51.15 for the US Department of Energy.

3.4.2. Collaboration Network

Figure 5 shows academic collaboration between countries and institutions in carbon finance. We select the top ten entries from each slice. From 1992 to 2021, a total of 319 nodes and 698 links contributed to the collaborative network with a density of 0.0138. China, the USA, the UK, Australia, Germany, Canada, and Spain account for the majority of articles in the network. In Figure 5, a pink circle represents intermediary centrality, where the circle size reflects the level of intermediate centrality. The larger the circle, the greater the number of bridging actions and closer collaborations with other nodes. Developed countries such as the USA (1.39), the UK (0.34), and the Netherlands (0.19) started their research in this field earlier and cooperated more closely with each other early on. Furthermore, it is clear that the USA is the only country shown with a pink circle on Figure 5, which indicates that it is the most collaborative with other countries in carbon finance research. China began publishing articles in this field in 2003 and has established cooperation with a dozen countries with a high publication output, including the US, the UK, Australia and Canada.

Moreover, Figure 5 reveals the contribution and cooperation of research institutions in carbon finance. The top four institutions are from China, namely the Chinese Academy of Sciences, North China University of Electric Power, Beijing University of Technology and Tsinghua University. The graph indicates that cooperation between institutions needs to be further strengthened.

4. Research Hotspot and Frontier Analysis

4.1. Keywords Co-Occurrence Analysis

Keywords usually offer the core contents of an article, reflecting the research value and research direction of the article, and are often used to identify current hotspots and trends in the research field by analyzing keywords with a high frequency of occurrence. We used CiteSpace to map the keyword co-occurrence of carbon finance research to scientifically measure the top research hotspots in the field (shown in Figure 6). Each node in Figure 6 represents a keyword, and the larger the node, the more frequently the keyword appears; each link represents the frequency of co-occurrence between keywords, and the thicker the link, the more frequent the co-occurrence between keywords. In addition, the colormap represents the evolution of time from early to recent from cool green to warm yellow; the darker the color, the earlier the start of time.

As can be seen in Figure 6 and

Table 5. Keywords of carbon finance research with frequency above 30.

Keywords	Freq.	Keywords	Freq.	Keywords	Freq.
CO2 emission	558	Performance	227	CO2	150
Impact	488	Consumption	225	Greenhouse gas emission	132
Energy	358	System	203	Sequestration	131
Emission	343	Cost	202	Bioma	126
Policy	332	Market	192	Reduction	119
Model	295	Efficiency	173	Economic growth	116
China	264	Environmental Kuznets curve	172	Optimization	116
Growth	249	Management	164	International trade	115
Energy consumption	245	Dioxide emission	156	Design	113
Climate change	230	Technology	155	Renewable energy	106

, the keywords “CO₂ emission”, “impact”, “energy”, “emission”, “policy”, “model”, “China”, “growth”, “energy consumption”, and “climate change” have larger nodes, and their frequency is higher. This indicates that the global climate is deteriorating due to the increase in greenhouse gas emissions such as carbon dioxide as a result of energy consumption and other issues. Therefore, carbon finance has been created to address the issue of climate change, which is clearly a policy issue. The high frequency of China in these keywords indicates that China is a significant player in both greenhouse gas production and climate change response.

4.2. Keywords Cluster Analysis

Keyword clustering analysis is based on keyword co-occurrence analysis and utilizes clustering statistics to simplify the complicated co-occurrence network link into connections among a limited number of groups. To further explore the themes of carbon finance research, we conducted a keyword clustering analysis in CiteSpace. However, because it is challenging to uncover specific information in the keywords purely based on the cluster name, it was necessary to combine the cluster’s primary keywords to examine the unique research content contained in each cluster in greater depth [35]. Depending on the structure of the network and the clarity of the clusters, CiteSpace provides module values and average profile values to judge the effectiveness of the mapping. The broad range of Q values is [0,1), with Q > 0.3 indicating that the structure of the identified connections is noteworthy; clustering is efficient and persuasive when the S value is 0.7, and clustering is generally considered reasonable when the S value is above 0.5 [36]. Based on the number of nodes in the clusters, we selected the top 6 clusters for presentation. Figure 7 shows the keyword clustering clusters, and the average silhouette value is 0.7966—a relatively high reference value.

The main keywords included in the first six clusters are listed in

Table 6. Clusters with the highest rankings and their primary keywords.

Num.	Silhouette Value	Cluster Name	Main Keywords
0	0.768	CO2 capture	techno-economic analysis; CO2 capture; economic analysis; CO2 utilization
1	0.803	economic growth	financial development; CO2 emissions; carbon emissions; energy consumption
2	0.84	carbon sequestration	climate change; ecosystem services; land use; carbon storage
3	0.72	model	Input–output model; cap-and-trade; coordination; competition; social welfare
4	0.764	financial development	emission trading scheme; financial performance; shadow price; data envelopment analysis; China; difference-in-differences
5	0.716	carbon price forecasting	carbon price; EU ETS; carbon price prediction; energy prices

. The first cluster is related to CO₂ capture, encompassing keywords such as techno-economic analysis, CO₂ capture, economic analysis, and CO₂ utilization. In this cluster, researchers focus on the techno-economic analysis of technology enhancements for carbon reduction in industrial processes and CO₂ capture and storage (CCS). CCS comprises three main components: capture, transport, and storage, and is a non-linear and complex time-varying system. Three primary CO₂ capture systems associated with different combustion processes exist: post-combustion, pre-combustion, and oxygenated fuel combustion [37]. Previous work has established that pipeline transport of liquid CO₂ is the most economical method for transporting large amounts of CO₂ [38]. In the context of CCS techno-economic analysis, researchers have focused on assessing the potential, cost, and environmental benefits of CCS technologies [39,40,41].

The second cluster is about economic growth and includes keywords including financial development, CO₂ emissions, carbon emissions, energy consumption, and others. This cluster is also a significant research hotspot. Interestingly, the research mainly focuses on developing countries, such as China, ASEAN countries, countries in the Middle East and North Africa, and countries along the “Belt and Road” route. Researchers in this cluster have used econometric models to investigate the interrelationships between the variables of financial development, economic growth, carbon emissions, trade openness, and energy consumption with empirical analysis. Among them, economic growth and carbon emissions often appear as dependent variables, and a part of the research proves that they are sometimes causally related to each other and that they have a strong positive relationship, such as the Hurlin panel causality results of Dumitrescu, which show a two-way causality between carbon emissions and economic growth, and economic growth and foreign direct investment [42]. Trade openness has both positive and negative effects on economic growth in different countries [42,43], and the same result is valid for carbon emissions [44,45,46,47]. Surprisingly, researchers in almost all countries have confirmed that renewable or clean energy consumption significantly reduces carbon emissions and improves environmental quality [44,47,48]. As such, policymakers must prioritize the adoption of renewable energy sources as a means of achieving sustainable economic growth.

The next cluster focuses on carbon sequestration, including climate change, ecosystem services, land use, carbon storage, and other keywords. Carbon sequestration is considered to be an important means of mitigating climate change and a crucial element of ecosystem services. It is the capture of carbon dioxide to be compressed, transported, and finally sequestered in geological formations and isolated from the atmosphere or used for other industrial production. The three main types of storage are geological, marine, and chemical [49,50,51]. Among the geological storage methods, researchers have focused on CO₂ storage in three different geological bodies: oil and gas reservoirs, coal wells, and deepwater reservoirs [52,53,54]. Although CO₂ storage in the oceans could be a viable alternative for reducing global warming, there are risks involved with the process, particularly the local impact on the deep-sea ecology [55]. Chemical sequestration technologies include CO₂ mineral sequestration (CMS), a promising approach to facilitate CO₂ sequestration and utilization [56,57,58,59]. CMS utilizes the reactivity of alkaline materials, including natural minerals or industrial solid waste containing calcium and magnesium, to form environmentally friendly solid carbonate products [60]. Chemical sequestration is a new CO₂ storage technology with unpredictable economic benefits and efficiency in emission reduction. The transfer of CO₂ from the atmosphere to the soil is also part of the carbon sequestration process. Studies have shown that carbon stored in soils is two to four times higher than that stored in the atmosphere and four times higher than that stored in vegetation [61]. Therefore, assessing the carbon sequestration capacity of different types of soils, such as forestry carbon sinks, agricultural carbon sinks, and grassland carbon sinks, is important. Meanwhile, many scholars are studying the carbon sequestration capacity of soils under different tillage practices [62,63,64,65].

One of the main constraints on a country’s urban development is land resources. Moreover, mitigating carbon emissions from land use is essential in achieving carbon neutrality. In the context of the concept of sustainable development, it is imperative to improve the efficiency of land resources and reduce land use carbon emissions. Carbon finance offers a novel perspective on sustainable development. Scholars have focused on the impact of ETS on land use, ways in which to improve land use efficiency and reduce carbon emissions throughout the land use process, and the transformation of land use under ETS and its related mechanisms. For example, Wang Peijia et al. [66] examined the spatial and temporal evolution of land use transformation (LUT) in China after the implementation of a carbon emissions trading system (CETS) based on an economic-environmental perspective, and Tang Yingkai et al. [67] examined the impact of a CETS on the trend of LUT change from three perspectives: economic effect, environmental effect, and Porter effect. Furthermore, Duan Bin et al. [68] examined whether carbon finance can optimize LUT efficiency in terms of economic and environmental effects.

Cluster 4 focuses on models, including input–output models, cap-and-trade, coordination, competition, social welfare, and other keywords. Firstly, overwhelming evidence shows that worldwide carbon emissions are primarily caused by carbon leakage in international trade [69]. Many scholars often use input–output models to study the drivers of carbon emissions changes in international trade and incorporate structural decomposition analysis in the process. Researchers have studied the drivers of carbon emissions in trade, from the network evolutionary characteristics of global carbon flows and spatial transfer characteristics, to interregional international trade, to the carbon transfer of domestic and foreign trade in a given country. Chinese researchers have begun to explore the economic benefits and environmental costs of inter-provincial trade and the carbon drivers of urban agglomerations and cities. The areas of investigation are primarily concentrated on the energy sector and the industrial structure. Some countries have scaled down to household consumption; for example, Duarte et al. [70] explores the relationship between household consumption patterns, income inequality, and global carbon emission trends in the EU. Secondly, carbon taxes and carbon trading are the two main regimes for reducing carbon emissions. A cap-and-trade system is an effective mechanism in a carbon emissions trading system. The Stackelberg game model has often been used to model the behavior and decisions of firms to reduce carbon emissions in the context of global efforts to reduce carbon emissions. The operational and financing models of low-carbon supply chains within industries have been most extensively studied in contexts where retail competition differs from monopolistic competition. For example, Yang et al. discuss how firms are allowed to make pricing and carbon reduction decisions under different levels of cooperation and financing approaches [71]; Lu et al. studied autonomous financing and financing cooperation behavior in a supply chain where manufacturers and retailers first implement low-carbon reduction technologies and then organize production and sales under a wholesale price contract [72]. Carbon prices and carbon allowances significantly impact firms’ carbon reduction decisions. The impact on social welfare is also substantial when considering the impact of abatement policies on firms’ behavior and decisions. For instance, Cao et al. analyzed pricing policies for production in dual-channel supply chains under remanufacturing subsidy policies and carbon tax policies and considered which policy is more beneficial to society [73]; Zhang considers the effectiveness of carbon abatement policies in terms of welfare effects and economics [74].

Cluster 5 investigates financial development. The main keywords in this cluster are emissions trading mechanisms, financial performance, shadow prices, data envelopment analysis, China, and difference-in-differences. With the widespread awareness of carbon neutrality, the momentum of economic development growth in a carbon neutrality scenario has become a research hotspot [75]. China is the world’s largest consumer of energy and emitter of carbon dioxide, and it is working to develop carbon finance and a low-carbon economy. Accordingly, researchers have studied the efficiency of China’s low-carbon economy from several perspectives. Specifically, researchers often use the integrated indicator approach of data envelopment analysis to study the productivity of relevant policy making sectors. For example, Lei et al. applied the data envelopment analysis framework to evaluate the performance and drivers of carbon-weighted economic development [76]; Meng et al. used the additive interval-adjusted measure data envelopment analysis (RAM-DEA) model to measure the low-carbon economic efficiency of China’s industrial sector from 2001 to 2013 [77]. At the same time, the study of corporate carbon emissions, as an important player in carbon emissions trading, is also essential. Among them, studies related to the relationship between carbon emissions and firm performance have received much attention. For instance, Busch discussed corporate carbon emissions and financial performance using a meta-analysis approach [78]; Ganda examined the impact of carbon emissions on the 2015 financial performance of 63 South African companies [79]. Additionally, research on the shadow price of carbon in carbon trading has received much attention. Double difference models have also been used to positively affect the evaluation of carbon trading policies. Yu et al. used a multi-time difference approach to assess the impact of China’s carbon trading pilot on urban–rural income inequality [80]; Liu et al. used a double difference model to assess the impact of carbon credits on non-fossil energy development in China [81].

Carbon trading and carbon taxes are two critical systems in the operation of carbon markets, and they are clearly complementary. A carbon tax is a direct ‘price instrument’ allows governments to levy taxes on the carbon emissions generated by companies. This way, enterprises with high emissions are compelled to pay compensation for their emissions and thus incorporate this into their investment and output decisions [82]. Emissions trading is a ‘quantitative instrument’ whereby governments set emission allowances for companies to buy and sell through emissions trading when they exceed or fall below their allowances. Emissions trading allows emitters to trade their emission allowances, thus indirectly setting a price for greenhouse gas emissions [83]. Carbon reduction is a gradual and complex process, and the two systems must work in parallel. On the one hand, carbon trading can improve the allocation of resources and regulate carbon emission reduction in aggregate; on the other hand, a carbon tax can take advantage of policy stability and avoid carbon trading market failures. Many scholars also support this composite mechanism; for example, the effect of a mixture of the carbon tax and carbon trading is slightly better than that of carbon tax only and significantly better than that of carbon trading only [84]; the effect of a mixture of a carbon tax and carbon trading is better than any single mechanism [85]; the composite mechanism of carbon emission reduction, a combination of a carbon tax and carbon trading, is an effective mechanism for addressing climate change.

Moreover, carbon taxes are a central tool for climate mitigation [86]. Many researchers have focused on the design of carbon tax policies, the design of carbon market trading mechanisms, and the design of synergistic mechanisms between carbon taxes and carbon markets. In relation to carbon tax policies, scholars have investigated the theoretical foundations underlying policy design, institutional development, and the associated implications, such as the effects of uneven distribution and socio-economic factors on environmental emissions [87,88,89]. At the same time, to cope with climate change and promote green and low-carbon development, many scholars have paid more attention to environmental tax policies; for example, some researchers have proposed tax policies to cope with climate change in China from both climate change mitigation and climate change adaptation perspectives; the impacts of emission fee policies and environmental protection tax laws on the corporate performance of heavy polluters and non-state-owned enterprises are more significant than that of environmentally friendly enterprises and state-owned enterprises [90]. Furthermore, it has been mentioned that the use of carbon taxes to mitigate the environmental impacts of climate change or to finance renewable energy projects has been shown to significantly increase citizens’ willingness to pay [91]. “Carbon neutrality” has been included in the development agenda of various countries around the globe. The transition to a low-carbon economy is critical for developing countries, as their economies are significantly reliant on fossil fuels [92]. Many scholars have invested in research related to the impact of fossil fuels on national low-carbon economic transitions. The results suggest that fossil fuel subsidies can impede the transition to a low-carbon economy, while the opposite results are found for renewable energy subsidies [93,94,95,96].

The sixth cluster is carbon price forecasting, including carbon price, EU ETS, carbon price prediction, energy prices, and other keywords. Carbon emissions are one of the major factors contributing to environmental pollution and climate change, and the efficient operation of the carbon emissions trading market effectively promotes carbon emission reduction. Accurate forecasting of carbon prices is vital for managing carbon trading markets, related policy making, and investors’ decisions. In this cluster, researchers focus on improving the accuracy and stability of carbon price forecasting. Moreover, they have proposed a number of carbon price forecasting model approaches, such as the deep neural network model TCN-Seq2Seq [97], a hybrid model for carbon price forecasting based on quadratic decomposition and improved extreme learning machine (ELM) [98], a hybrid model of GARCH and long-term short-term memory network [99], a quadratic decomposition carbon price forecasting model based on a kernel limit learning machine optimized by the sparrow search algorithm [100], and other related carbon price forecasting models.

4.3. Keywords Bursts Analysis

Keywords with bursts have a sudden increase in frequency [35]. Burst detection is an effective analytic method for identifying keywords that have attracted significant attention from linked scientific communities over a period of time [101]. The emergent word detection function provided by CiteSpace can extract emergent words from a large number of literature subject terms, thus clearly showing the research frontier and development trend of a specific discipline.

Table 7. Keywords with the bursts in the last three years.

Keywords	Strength	Begin	End	1992–2021
renewable energy	20.52	2019	2021
urbanization	19.17	2019	2021
energy consumption	9.62	2019	2021

shows the strength and occurrence timespan of terms with bursts in the last three years (2019–2021) according to CiteSpace. The blue line indicates the time interval while the red line indicates the period in which each keyword burst occurred, highlighting the start and end of each burst interval [102]. Table 7 shows that “renewable energy”, “urbanization”, and “energy consumption” are active topics that have emerged in recent years. Combining the keyword clustering analysis results, we summarize the emerging frontiers of carbon finance research as follows.

At present, with urbanization at its highest level, there is a substantial economic gap between rural and urban populations in developing countries that has had a significant impact on CO₂ emissions [103,104]. According to certain studies, urbanization and carbon emissions have an inverted U-shaped relationship [105]. The higher the level of urbanization, the greater the carbon emissions, but with the increase in industrialization and the optimization and upgrading of industrial structure, carbon emissions gradually decrease. Therefore, accelerating the industrial transformation in the urbanization process, especially the transformation of high-emission and high-pollution industries, and promoting green urbanization development are of great significance for mitigating global warming. Currently, researchers in different countries are focusing on measuring urbanization and its impact on national or regional carbon emissions. Further research is necessary to explore how green urbanization can be implemented to expedite the transition of energy-intensive industries, and how the potential of carbon finance in urbanization can be harnessed.

Energy consumption is a major contributor to global carbon emissions. Most scientific literature reviews suggest that the optimization of the energy consumption structure has a significant positive correlation with the decline in carbon emission intensity [106,107]. It should be noted that China’s rapid urbanization may lead to a sharp increase in energy demand [108]. It has been recognized that developing clean and renewable energy sources is crucial to optimizing the energy mix and reducing energy consumption in industries. Renewable energy is an important source of energy, as it does not cause harm to the environment or public health [109]. Consequently, numerous researchers are conducting research on renewable energy. Nonetheless, the financial sector’s contribution to restructuring the industrial and energy mix is equally vital. A collaborative effort from all sectors is necessary to transform into a green, low-carbon economy and attain the double carbon objective.

5. Discussion

Global warming and severe weather caused by climate change have made people’s living environment extremely challenging. The United Nations proposed the goal of carbon peaking and carbon neutrality as a way to address climate change. The development of renewable energy is the primary means of achieving the “double carbon” goal and reducing CO₂ emissions. However, the high cost of renewable energy infrastructure has hindered the progress of clean energy development, especially in developing countries [110]. Therefore, increasing investment and financing in renewable energy projects is crucial in achieving energy transition and promoting the reduction of carbon emissions. At the same time, the carbon finance system should be used to accelerate the investment and financing process of renewable energy projects through a full range of innovations. In addition, promoting the innovation of carbon financial products is a crucial component of a broader strategy to combat climate change. Such efforts are imperative in light of the urgency and magnitude of the challenge.

5.1. Increase the Investment and Financing of Renewable Energy Projects to Promote the Process of Carbon Emission Reduction

The renewable energy industry faces significant challenges due to the scarcity of funds and ineffective financing mechanisms. Renewable energy projects require high initial investment and the establishment of stable and effective financing channels to reduce costs. To address these issues, relevant policy makers should improve the corresponding new energy policy framework to build an investment-friendly environment and provide relevant preferential policies to support such projects. In addition, investment bodies and financial institutions should explore alternative financing and credit enhancement measures, such as strengthening collaborations with multivariate developmental financial institutions based on mixed financing modes. These measures can limit the use of sovereign and corporate guarantees, and join efforts with multilateral developmental financial institutions and foreign banks to explore non-recourse or limited recourse project financing modes. Such cooperative efforts will maximize the risk control abilities of multilateral international capital. Risk assessment mechanisms should also be enhanced for renewable energy projects.

5.2. Leverage the Carbon Finance System

Carbon finance is an essential market-based tool for promoting the “double carbon” strategic goal. Effective use of the carbon market and carbon finance can aid the development of new green and low-carbon technologies, industries, and business models. This can help achieve the goal of carbon peaking and carbon neutrality. Innovative financial institutions can play a vital role in deepening and diversifying the carbon finance system. Financial institutions’ ability to innovate and supply carbon finance products is crucial for the enhancement, diversification, and promotion of the carbon finance system. Such efforts can support the green development of actual enterprises. To achieve the goal of carbon peaking and carbon neutrality as early as possible, the carbon finance system should be leveraged through policy, management, product, market, and technological innovations. In addition, a combination of top-level design and local practice, coordination mechanisms, capacity building, and infrastructure improvements are essential. Such measures can provide sustainable momentum for green, low-carbon development.

5.3. Promote the Development of Carbon Financial Products

Innovative financial tools play a crucial role in advancing carbon finance. As a financial pattern promoting sustainable economic development, carbon finance is considered an essential tool for supporting carbon emission reduction. Consequently, scholars have shown a keen interest in it. Carbon finance encompasses various mechanisms, including carbon emission trading, such as carbon markets and carbon taxation, and other carbon finance products, for example, carbon emission rights, carbon forwards, futures, and options. Despite their importance, little research has been performed on the following relevant aspects:

Firstly, it is imperative to develop a mechanism for quantifying the cost of carbon emissions. As countries adopt asymmetrical emission reduction policies to address climate change, carbon emission costs may be transferred across borders in the form of trade or outsourcing. Unfortunately, less developed countries often bear more carbon reduction costs due to inconsistencies between carbon emission costs and benefits. To address this issue, it is essential to establish a reasonable mechanism for allocating carbon emission rights and responsibilities to quantify the cost of carbon emissions.

Secondly, the involvement of companies in carbon emission trading is an effective way of reducing carbon emissions. However, carbon trading mechanisms for individuals represent another attractive approach for reducing carbon emissions at the consumption level. Such a mechanism could result in a shift of welfare from higher to lower income groups, promoting social fairness. For an effective mechanism, various factors, including personal carbon account management, market operation, regulation, license allocation, and transaction costs, must be taken into consideration.

Thirdly, governments should promote the growth of carbon finance derivative products, such as carbon forwards, futures, options, and swaps, to create more product cases. By doing so, we can leverage the resource allocation and incentive constraint functions of finance. To keep pace with the current trend of financial technology development, governments should encourage enterprises and financial institutions to fully utilize technology in conducting quantitative assessments of environmental risks and enhancing the foundation for pricing carbon financial assets. Such technologies may include big data, artificial intelligence, and blockchain.

6. Conclusions

Based on the bibliometric method, this paper analyzes 4408 papers from the “Web of Science core collection” over the 1992–2021 period using SCI-E and SSCI, which significantly reveals the current status, hotspots, and frontiers of carbon finance research. The following are some of the study’s findings.

In a phase of rapid development, publications on carbon finance have increased rapidly over the past 30 years, especially during the last five years. The Journal of Cleaner Production is the most productive. In addition, China is the country with the highest number of publications, and the United States is the country with the most vital links to other countries. The Chinese Academy of Sciences is the most representative independent institution in this field. Furthermore, Wei YM, Lin BQ, and Wang Q from China are the most representative authors of carbon finance research.

The co-occurrence analysis of the keywords indicates that carbon finance is a policy tool for financing the reduction of carbon emissions and is closely related to the field of “energy”. On the other hand, the keyword clustering results show that the primary research focuses on: “carbon capture”, “economic growth”, “carbon sequestration”, “financial development”, “modeling”, and “carbon price forecasting”. Under the wave of global carbon emission reduction, firstly, researchers pay much attention to the improvement of carbon emission reduction technology; secondly, the correlation between economic growth, financial development and other factors, and carbon emission reduction influences the choice of national carbon reduction approaches; thirdly, the pricing of carbon emission rights under the aggregate control and emissions trading mechanism is the core of solving the problem of financing in the field of carbon finance; fourthly, the use of different models to predict carbon prices more accurately is crucial for carbon market management, policymaking, and investor decisions; finally, utilizing a data envelopment model to measure the emission reduction efficiency of relevant decision-making departments is also very important for promoting carbon emission reduction in a country. The keyword burst results show that the research hotspots mainly focus on the impact of “energy consumption”, “renewable energy”, and “urbanization” on carbon emissions. Against the backdrop of global climate change and large-scale energy consumption, the carbon finance potential of renewable energy projects and industrial transformation in the urbanization process is worth further investigation.