This paper uses Chinese provincial panel data from 2011 to 2019, measures CO₂ emissions of provinces in China using the IPCC method, and explores the impact of digital finance on CO₂ emissions through the SAR model and SDM. Empirical study shows that digital finance significantly reduces CO₂ emissions. Digital finance reduces CO₂ emissions by promoting energy industrial structure transformation and spreads to surrounding areas through spillover effects, contributes to increasing green patents granted and thus reduces regional CO₂ emissions, advances the green technological progress and therefore inhibits CO₂ emissions, but reduces the green technological progress in surrounding areas and increases CO₂ emissions due to the siphon effect. With the development of digital finance itself, the higher the level of financial regulation, green development and the green finance index, the better the effect of digital finance on CO₂ emission reduction. Additionally, digital finance significantly reduces CO₂ emissions in the south of China.

The world is facing the challenges of climate change and energy structure adjustments. The role of digital finance, a new branch of business that combines digital technology and traditional financial products, in reducing global carbon emissions needs to be studied. This paper uses panel data on 280 cities in China from 2011 to 2019 to empirically examine the efficacy of digital finance for governing carbon emission reductions and the mechanism by which it does so. The results show that: 1. digital finance can facilitate carbon emission reductions and help reduce carbon emission intensity within regions.2. Digital finance helps promote the rational allocation of resources and alleviates factor distortions by encouraging firms to rationally use their own factor endowments so as to reduce carbon emission intensity, which holds robustly after considering the endogenous issues such as possibly omitting variables, collinearity and so on. 3.Differences in geographical location, the vitality of regional innovation and entrepreneurship, regional willingness to protect the environment, and environmental protection levels lead to heterogeneity in the effect of digital finance on carbon emission intensity. Therefore, it is necessary to vigorously develop digital finance as a long-term tool for carbon governance.