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At present, the life and production of our society are still accompanied by high pollution emissions. The proposal of the "double carbon" goal puts forward clearer requirements for China's energy conservation and emission reduction process. To cope with stricter green development requirements, green finance came into being, contributing a new path to the realization of the "double carbon" goal. This paper is based on the panel data of 30 provinces and cities in China (except Tibet, Hong Kong, Macao, and Taiwan) from 2011 to 2020, using the fixed effect model, threshold model, mediator model, and SDM model to study the impact of green finance on carbon neutralization capacity and its impact path based on reasonable measurement of regional green finance development level and carbon neutralization capacity. The study found that due to the existence of the "green paradox" and "forced emission reduction", China's green finance has a significant positive U-shaped impact path on carbon neutralization capacity; at the same time, informal regulation has a significant single-threshold effect in this path. When informal regulation crosses 0.47, the impact of green finance on carbon neutralization capacity will change from negative to positive, overcoming the impact of the "green paradox"; there is a nonlinear mediating effect of marketization level and technological innovation in the path of green finance affecting carbon neutralization capacity. In addition, green finance not only affects local carbon neutralization capacity but also has a positive spillover effect on neighboring regions. [ABSTRACT FROM AUTHOR]

• A system for measuring carbon neutrality capacity is constructed. • The carbon neutrality potential in the YREB was assessed by examining two perspectives: relative and absolute capacities. • Investigate the variations and trends in carbon neutral capacity within the YREB. • Provide advice for reaching carbon neutrality in the upper, middle, and lower areas of the YREB. The carbon neutralization process continues to be a significant concern in China, particularly in the Yangtze River Economic Belt. This study defines carbon neutrality and presents a regional capacity measurement index system that includes 12 indicators across four dimensions: production reduction, lifestyle reduction, ecological removal, and technological removal. To assess the relative and absolute levels of carbon neutrality capacity in the Yangtze River Economic Belt, the study uses the time-weighted rough set theory and the uncertain measurement model. Additionally, the study also uses Kernel density estimation, Dagum Gini coefficient decomposition, and convergence analysis to examine the development differences in the relative capacity of carbon neutrality in the region. The findings indicate that from 2013 to 2021, the relative capacity of carbon neutrality in the Yangtze River Economic Belt exhibited an upward trend with fluctuations, and there were significant disparities in development between the upper, middle, and lower reaches of the region. However, these differences showed signs of convergence and a general convergence trend. Moreover, the production reduction and lifestyle reduction aspects in the Yangtze River Economic Belt region are currently at a moderate level, while there is still considerable room for improvement in terms of ecological reduction and technological reduction. Furthermore, there are obvious regional differences in the absolute carbon neutral capacity of the Yangtze River Economic Belt region: the upstream region of the Yangtze River Economic Belt is primarily driven by carbon emissions reduction, the middle reaches are driven by production reduction and the downstream region is driven by carbon removal. Consequently, it is crucial to consider the regional development characteristics of the Yangtze River Economic Belt and implement targeted strategies tailored to local conditions. [ABSTRACT FROM AUTHOR]