OECD Environment Working Papers
This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.
- ISSN: 19970900 (online)
- https://doi.org/10.1787/19970900
Public Interventions and Private Climate Finance Flows: Empirical Evidence from Renewable Energy Financing
This study uses a unique dataset of investment flows to analyse the role of two categories of public interventions (finance and policies) in mobilising flows of private climate finance worldwide and in the more specific context of flows to and in developing countries. The objectives are threefold. First, the paper presents ‘observed’ ratios of total private to public finance in selected climate-related sectors. Second, it seeks to understand the determinants of private climate finance flows by analysing the role of key public finance (bilateral, domestic and multilateral) and public policy instruments (feed-in tariffs, renewable energy quotas, the Clean Development Mechanism), while taking into account a number of market and country conditions. For reasons of data availability, the focus of this econometric analysis is on a subset of six renewable energy sectors (wind, solar, biomass, small hydro, marine and geothermal). Finally, the paper assesses the likely mobilisation impact of past public interventions in these six sectors, and draws a comparison with approaches that ignore the role of policy as well as country and market conditions.
Results suggest that both public finance and public policies have played an important role in private finance mobilisation globally. In the context of finance to and in developing countries, the results highlight the currently untapped potential of domestic public policies to increase mobilisation. The methodology proposed in this report is an initial attempt to estimate private climate finance mobilisation empirically. It should be seen as a first step towards developing more comprehensive methodologies for analysing and estimating private finance mobilisation in the global climate policy context.
Keywords: investment, climate change, estimation, mobilisation, leverage, renewable energy, private finance, public interventions
JEL:
Q54: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Climate; Natural Disasters and Their Management; Global Warming;
H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies;
Q55: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environmental Economics: Technological Innovation;
Q42: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Alternative Energy Sources;
L94: Industrial Organization / Industry Studies: Transportation and Utilities / Electric Utilities;
Q58: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environmental Economics: Government Policy;
O3: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights;
G3: Financial Economics / Corporate Finance and Governance;
Q48: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Energy: Government Policy
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