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Environmental Policies and Risk Finance in the Green Sector: Cross-country Evidence

Author

Listed:
  • Chiara Criscuolo

    (OECD)

  • Carlo Menon

    (OECD)

Abstract

Start-up firms play a crucial role in bringing to the market the innovations needed to move to a greener growth path. Risk finance is essential for allowing new ventures to commercialise new ideas and grow, especially in emerging sectors. Still, very little is known about the drivers and the characteristics of risk finance in the green sector. This paper aims to fill this gap by providing a detailed description of risk finance in the green sector across 29 OECD and BRIICS countries over the period 2005-2010 and identifying the role that policies might have in shaping high-growth investments in this sector. Results are drawn from a comprehensive deal-level database of businesses seeking financing in the green industry combined with indicators of renewable policies and government R&D expenditures. The results suggest that both supply-side policies and environmental deployment policies, designed with a long-term perspective of creating a market for environmental technologies, are associated with higher levels of risk finance relative to more short-term fiscal policies, such as tax incentives and rebates. In addition, when focusing on renewable energy generation, the results confirm the positive association of generous feed-in tariffs (FITs) with risk-finance investment. However in the solar sector excessively generous FITs tend to discourage investment. Politiques de l'environnement et financement par capital-risque dans le secteur vert : Données internationales Les jeunes entreprises jouent un rôle fondamental dans la mise sur le marché des innovations nécessaires à l’évolution vers une trajectoire de croissance plus respectueuse de l’environnement. Le financement par capital-risque est essentiel pour leur permettre de croître et de commercialiser de nouvelles idées, notamment dans les secteurs émergents. Pourtant, les déterminants et les caractéristiques de ce financement dans le secteur vert sont toujours en grande partie méconnus. Le présent document vise à combler cette lacune en décrivant de façon détaillée le financement par capital-risque dans le secteur vert dans 29 pays de l’OCDE et BRIICS au cours de la période 2005-2010, et en mettant en évidence l’influence qu’ont pu avoir les politiques publiques sur la configuration des investissements dans les entreprises à forte croissance de ce secteur. Les résultats proviennent d’une vaste base de données des transactions des entreprises du secteur vert à la recherche de financements, qui a été croisée avec des indicateurs des politiques relatives aux énergies renouvelables et des dépenses publiques de R-D. Ils donnent à penser qu’aussi bien les politiques agissant sur l’offre que les politiques de déploiement conçues dans une perspective à long terme pour créer un marché pour les technologiques environnementales donnent lieu à un volume plus important de financement par capital-risque que des mesures budgétaires à plus court terme comme les incitations fiscales et les allégements d’impôts. En outre, les résultats concernant la production d’énergie renouvelable confirment la corrélation positive entre tarifs d’achat généreux et investissements en capital-risque. Cela étant, les tarifs d’achat excessivement généreux dans la filière solaire ont tendance à décourager l’investissement.

Suggested Citation

  • Chiara Criscuolo & Carlo Menon, 2014. "Environmental Policies and Risk Finance in the Green Sector: Cross-country Evidence," OECD Science, Technology and Industry Working Papers 2014/1, OECD Publishing.
    • Handle: RePEc:oec:stiaaa:2014/1-en
    DOI: 10.1787/5jz6wn918j37-en
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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