Mobilizing private finance for low-carbon innovation – A systematic review of barriers and solutions

Polzin, Friedemann

doi:10.1016/j.rser.2017.04.007

Cited by 208 publications

(123 citation statements)

References 156 publications

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“…As aforementioned, the EP's proposal targets calibrating capital requirements as a way to mobilise capital to contribute to mitigating climate change. The need for mobilising both JFRC 27,3 private and public capital to facilitate the transition to a low-carbon economy and close the current investment gap is widely acknowledged and potential channels are being discussed in the literature (European Commission, 2018;OECD, 2017;Owen et al, 2018;Polzin, 2017;UNEP FI, 2009).…”

Section: Literature Reviewmentioning

confidence: 99%

Quantifying the potential impact of a green supporting factor or brown penalty on European banks and lending

Thomä

Gibhardt

2019

JFRC

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Purpose -The European Parliament and Commission are considering introducing a green supporting factor (GSF) or brown penalty (BP) for capital reserve requirements. This paper aims to estimate the potential impact such a policy intervention may have on both capital reserves of European banks and the cost and availability of capital to "green" and "brown" investments.Design/methodology/approach -The paper draws on the existing empirical and theoretical literature on the impacts of changes to capital reserve requirements on the real economy. It applies these estimates on the particular policy intervention currently being discussed at EU level to estimate the potential range of impacts on the cost of capitalmeasured in basis pointsand the availability of capitalmeasured in per cent changes to lending.Findings -A GSF would have a limited effect on overall capital requirements of banks compared to a BPgiven the larger universe of assets on which such a penalty would be applied. The estimated effect is a reduction in capital requirements associated with a GSF of around e3-4bn based on baseline "green" definitions. In terms of cost of capital, the paper estimates a reduction of 5 to 26 basis points for green projects (with inverse expected effects for a BP). In terms of availability of capital, analysing a BP suggests a potential reduction in lending to brown assets of up to 8 per cent.Originality/value -The paper provides direct evidence, with the first quantitative analysis of the potential impact of the current policy proposition discussed at EU-level.

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Section: Literature Reviewmentioning

confidence: 99%

Quantifying the potential impact of a green supporting factor or brown penalty on European banks and lending

Thomä

Gibhardt

2019

JFRC

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“…While Morocco is situated in one of the world's most favorable regions for the generation of solar and wind electricity, significant investment barriers that jeopardize RES-E development at scale still prevail [17][18][19][20]. Different investment risk profiles and risk perceptions across countries and technologies lead to differences in financing costs for individual technologies, which eventually lead to different generation costs [21].…”

Section: Introductionmentioning

confidence: 99%

Morocco’s sustainable energy transition and the role of financing costs: a participatory electricity system modeling approach

et al. 2019

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Background: Morocco is facing major challenges in terms of its future energy supply and demand. Specifically, the country is confronted with rising electricity demand, which in turn will lead to higher fossil fuel import dependency and carbon emissions. Recognizing these challenges, Morocco has set ambitious targets for the deployment of renewable energy sources for electricity generation (RES-E). The realization of these targets will lead to a fundamental transition of the Moroccan electricity sector and requires substantial public and private investment. However, different risks constitute barriers for private RES-E investments and lead to high financing costs, which may eventually discourage capital-intensive RES-E projects.Methodology: While the existing literature has mainly focused on assessing the impact of financing costs on the economic competitiveness of individual technologies, the aim of this research is to assess the techno-economic feasibility of different electricity generation portfolios. To recognize the social dimension of the sustainable energy system transition, the electricity scenarios for Morocco have been jointly developed with stakeholders in a scenario building workshop in Rabat, employing a downscaled version of the open source electricity market model renpassG!S, augmented by a weighted average cost of capital (WACC) module.Results: In the stakeholder workshop, four different electricity scenarios for Morocco were co-developed. Each of these scenarios describes a consensual and technologically feasible future development path for the Moroccan energy system up to 2050, and comprises conventional fossil fuel-based technologies, as well as RES-E technologies in varying shares. Employing the downscaled renpassG!S model, we find that total system costs, as well as average levelized costs of electricity (LCOE) can be reduced substantially with low-cost financing. Conclusions:Our results indicate that de-risking RES-E investments can lead to cost competitiveness of a 100% RES-E-based electricity system with mixed-technology scenarios at marked financing costs. Therefore, we identify specific de-risking recommendations for Moroccan energy policymaking. In addition, we argue that participatory scenario modeling enables a better understanding of the risk perceptions of stakeholders, and can eventually contribute to increasing the political feasibility of sustainable energy transition pathways.

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“…Nowadays it has been widely recognized that humanity is facing various grand challenges such as climate change, resource depletion, and environmental degradation [1][2][3][4]. Unfortunately, the building and construction industry is responsible for the rise of these challenges to a large extent, particularly because of its numerous consumption of energy, water, and raw materials [5][6][7][8].…”

Section: Introductionmentioning

confidence: 99%

A Global Review of Sustainable Construction Project Financing: Policies, Practices, and Research Efforts

2017

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Despite the increasing investment in sustainable development over the past decade, a systematic review of sustainable construction project financing is lacking. The objectives of this paper are to conduct a systematic review to examine the policies, practices, and research efforts in the area of sustainable construction project financing, and to explore the potential opportunities for the future research. To achieve these goals, this paper first reviewed the sustainable construction project financing practices implemented by four representative developed economies including the United Kingdom, the United States, Singapore, and Australia. Then, this paper reviewed the efforts and initiatives launched by three international organizations including the United Nations, the Organization for Economic Co-operation and Development, and International Finance Corporation. After that, this paper reviewed the research efforts of sustainable construction project financing published in peer-review journals and books. This paper identified four major research themes within this area, which are the review of financial stakeholders and market of sustainable construction, benefits and barriers to sustainable construction project financing, financial vehicles for sustainable construction projects, innovative models and mechanisms for sustainable construction project financing. Additionally, this paper revealed five directions for the future research of sustainable construction project financing, which are the identification of financial issues in sustainable construction projects, the investigation of financial vehicles for sustainable construction projects in terms of their strengths, limitations, and performances, the examination of critical drivers for implementing sustainable construction project financing, the development of a knowledge-based decision support system for implementing sustainable construction financing, and the development of best practices for implementing sustainable construction project financing. This paper contributes to the body of knowledge by reviewing existing policies, practices, and research efforts in the area of sustainable construction project financing. Meanwhile, the findings from this paper benefit the industry as well, because they are able to provide the practitioners with a holistic view of sustainable construction project financing, thereby enhancing their knowledge and skills in this regard.

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Mobilizing private finance for low-carbon innovation – A systematic review of barriers and solutions

Cited by 208 publications

References 156 publications

Quantifying the potential impact of a green supporting factor or brown penalty on European banks and lending

Quantifying the potential impact of a green supporting factor or brown penalty on European banks and lending

Morocco’s sustainable energy transition and the role of financing costs: a participatory electricity system modeling approach

A Global Review of Sustainable Construction Project Financing: Policies, Practices, and Research Efforts

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