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Sustainable Solutions for Green Financing and Investment in Renewable Energy Projects

Author

Listed:
  • Farhad Taghizadeh-Hesary

    (Tokai University, Hiratsuka, Kanagawa 259-1292, Japan)

  • Naoyuki Yoshino

    (Asian Development Bank Institute, Chiyoda-ku, Tokyo 100-6008, Japan
    Faculty of Economics, Keio University, Minato-ku, Tokyo 108-8345, Japan)

Abstract

The lack of long-term financing, the low rate of return, the existence of various risks, and the lack of capacity of market players are major challenges for the development of green energy projects. This paper aimed to highlight the challenges of green financing and investment in renewable energy projects and to provide practical solutions for filling the green financing gap. Practical solutions include increasing the role of public financial institutions and non-banking financial institutions (pension funds and insurance companies) in long-term green investments, utilizing the spillover tax to increase the rate of return of green projects, developing green credit guarantee schemes to reduce the credit risk, establishing community-based trust funds, and addressing green investment risks via financial and policy de-risking. The paper also provides a practical example of the implementation of the proposed tools.

Suggested Citation

  • Farhad Taghizadeh-Hesary & Naoyuki Yoshino, 2020. "Sustainable Solutions for Green Financing and Investment in Renewable Energy Projects," Energies, MDPI, vol. 13(4), pages 1-18, February.
  • Handle: RePEc:gam:jeners:v:13:y:2020:i:4:p:788-:d:319176
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    References listed on IDEAS

    as
    1. Farhad Taghizadeh-Hesary & Naoyuki Yoshino & Ehsan Rasoulinezhad, 2017. "Impact of the Fukushima Nuclear Disaster: Analysis on Japan’s Oil Consuming Sectors," ADB Institute Series on Development Economics, in: Naoyuki Yoshino & Farhad Taghizadeh-Hesary (ed.), Japan’s Lost Decade, chapter 0, pages 117-133, Springer.
    2. Sweerts, Bart & Longa, Francesco Dalla & van der Zwaan, Bob, 2019. "Financial de-risking to unlock Africa's renewable energy potential," Renewable and Sustainable Energy Reviews, Elsevier, vol. 102(C), pages 75-82.
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    6. Steckel, Jan Christoph & Jakob, Michael, 2018. "The role of financing cost and de-risking strategies for clean energy investment," International Economics, Elsevier, vol. 155(C), pages 19-28.
    7. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki, 2019. "The way to induce private participation in green finance and investment," Finance Research Letters, Elsevier, vol. 31(C), pages 98-103.
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    11. Tobias S. Schmidt, 2014. "Low-carbon investment risks and de-risking," Nature Climate Change, Nature, vol. 4(4), pages 237-239, April.
    12. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Rasoulinezhad, Ehsan, 2017. "Impact of Fukushima Nuclear Disaster on Oil-Consuming Sectors of Japan," ADBI Working Papers 659, Asian Development Bank Institute.
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    15. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad, 2019. "Optimal credit guarantee ratio for small and medium-sized enterprises’ financing: Evidence from Asia," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 342-356.
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