Examining the Financial Kuznets Curve: How Finance, Governance and Green Economy Impact Renewable Energy Consumption in Selected G20 Countries

This article examines the non‐linear association between financial development and renewable energy consumption over 16 selected G20 countries from 1996 to 2022, introducing and empirically validating the Financial Kuznets Curve (FKC). Using a bank‐based composite financial development index and retaining the PMG‐ARDL estimator, the findings confirm an N‐shaped FKC characterised by a coefficient (), over three development phases, with turning points identified at financial development values of 0.114 and 2.491, confirming findings using FMOLS, DOLS and IV‐2SLS as robustness. During intermediate stages, the results are consistent with capital being temporarily redirected towards fossil‐fuel‐intensive sectors, associated with a suppression of REC. At advanced stages, mature and diversified financial systems re‐emerge as strong facilitators of clean energy adoption. Governance quality, green economy and FDI each exert significant positive long‐run effects on REC, while carbon emissions reflect a structural fossil‐fuel lock‐in that dampens renewable energy shares. The error‐correction term confirms a stable long‐run cointegrating association, with approximately 50% of disequilibria corrected each year. Providing empirical evidence for stage‐specific financial policies and green economy frameworks in line with global climate commitments and the Sustainable Development Goals.