The Impact of Unconventional Monetary and Fiscal Policies on Green Energy Investment: Evidence for South Africa

Abstract

The global transition to a green economy demands substantial investments from both public and private sectors, with profound implications for employment, living standards, and long-term economic resilience. This transformation is occurring amid heightened global financial uncertainty, liquidity constraints, and heightened risk aversion. Against this backdrop, this study investigates the impact of unconventional monetary and fiscal policies on green energy investment in South Africa. In response, governments and central banks have implemented unconventional monetary and fiscal policy tools, such as carbon taxes, green bonds, and green quantitative easing (GQE), to mobilise capital toward renewable energy and sustainable production. While these instruments have gained global attention, their effectiveness in stimulating green investment remains uncertain, particularly in developing economies like South Africa, where structural challenges persist, including limited financial resources, weak regulatory frameworks, and underdeveloped capital markets. Using annual time-series data from 1990 to 2024, the analysis employs the Nonlinear Structural Break Autoregressive Distributed Lag (NSB-ARDL) model to capture both short- and long-run symmetric and asymmetric effects of these policies. By addressing existing knowledge gaps, the study aims to enhance understanding of how climate-related macroeconomic policies are transmitted in middle-income, carbon-intensive economies with significant structural barriers. The findings are expected to demonstrate that unconventional policy measures can play a pivotal role in mobilising investment toward sustainable energy, supporting South Africa’s transition to a low-carbon economy.