Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-23T05:44:48.920Z Has data issue: false hasContentIssue false
  • English
  • Français

Finance for renewable energy: an empirical analysis of developing and transition economies

Published online by Cambridge University Press:  26 February 2010

CHRISTA N. BRUNNSCHWEILER
CHRISTA N. BRUNNSCHWEILER*
Affiliation:
CER-ETH – Center of Economic Research at ETH Zurich, Zuerichbergstrasse 18, 8092 Zurich, Switzerland and OxCarre, University of Oxford. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper examines the role of the financial sector in renewable energy (RE) development. Although RE can bring socio-economic and environmental benefits, its implementation faces a number of obstacles, especially in non-OECD countries. One of these obstacles is financing: underdeveloped financial sectors are unable to efficiently channel loans to RE producers. The influence of financial sector development on the use of renewable energy resources is confirmed in panel data estimations on up to 119 non-OECD countries for 1980–2006. Financial intermediation, in particular commercial banking, has a significant positive effect on the amount of RE produced, and the impact is especially large when we consider non-hydropower RE such as wind, solar, geothermal and biomass. There is also evidence that the development of the RE sector has picked up significantly in the period since the adoption of the Kyoto Protocol.

Type
Research Article
Information
Environment and Development Economics , Volume 15 , Issue 3 , June 2010 , pp. 241 - 274
Copyright
Copyright © Cambridge University Press 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Archer, C.L., and Jacobson, M.Z. (2005), ‘Evaluation of global wind power’, Journal of Geophysical Research 110: D12110.CrossRefGoogle Scholar
Arellano, M., and Bond, S. (1991), ‘Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations’, Review of Economic Studies 58 (2): 277–97.CrossRefGoogle Scholar
Babbar, S., and Schuster, J. (1998), ‘Power project finance: experience in developing countries’, World Bank RMC Discussion Paper No. 119.Google Scholar
Baltagi, B.H. (2008), Econometric Analysis of Panel Data, 2nd Edn, Chichester, UK: John Wiley & Sons.Google Scholar
Barbier, E. (2009), A Global Green New Deal, Report prepared for the Economics and Trade Branch, Division of Technology, Industry and Economics, UNEP, February 2009.Google Scholar
Beck, T., Demirgüç-Kunt, A., and Levine, R. (2000), ‘A new database on financial development and structure’, World Bank Economic Review 14: 597–605.CrossRefGoogle Scholar
Beck, T., Demirgüç-Kunt, A., Laeven, L., and Maksimovic, V. (2004a), ‘The determinants of financing obstacles’, Journal of International Money and Finance 25 (6): 932–952.CrossRefGoogle Scholar
Beck, T., Demirgüç-Kunt, A., and Maksimovic, V. (2004b), ‘Bank competition and access to finance: international evidence’, Journal of Money, Credit, and Banking 36 (3): 627–648.CrossRefGoogle Scholar
Brunnschweiler, C.N. (2006), ‘Financing the alternative: renewable energy in developing and transition countries’, Economics Working Paper Series 06/49, ETH Zurich, Zurich, Switzerland.CrossRefGoogle Scholar
Carlin, W., and Mayer, C. (2003), ‘Finance, investment and growth’, Journal of Financial Economics 69 (1): 191–226.CrossRefGoogle Scholar
Churchill, A.A., and Saunders, R.J. (1989), ‘Financing of the energy sector in developing countries’, World Bank Industry and Energy Department Working Paper, Energy Series Paper No. 14.Google Scholar
Deffeyes, K.S. (2005), Beyond Oil: The View from Hubbert's Peak, New York: Hill and Wang.Google Scholar
Demirgüç-Kunt, A., and Levine, R. (2001), Financial Structure and Economic Growth: A Cross-Country Comparison of Banks, Markets, and Development, Cambridge, MA: MIT Press.CrossRefGoogle Scholar
Demirgüç-Kunt, A., and Maksimovic, V. (1999), ‘Institutions, financial markets, and firm debt maturity’, Journal of Financial Economics 54: 295–336.CrossRefGoogle Scholar
Economist, The (2009), ‘2020 vision: The peak oil debate’, December 10th.Google Scholar
EIA (Energy Information Administration) (2000), ‘Long term world oil supply, presentation prepared for the American Association of Petroleum Geologists’ [Online], http://www.eia.doe.gov/pub/oil_gas/petroleum/presentations/2000/long_term_supply/index.htm (posted July 28, 2000).Google Scholar
EIA (Energy Information Administration) (2006), ‘International energy annual’ [Online], http://www.eia.doe.gov/ (release December 8, 2008).Google Scholar
ESMAP (1999), ‘Global energy sector reform in developing countries: a scorecard’, Vol. 1, World Bank, ESM219 (July 99).Google Scholar
Gwartney, J., Lawson, R., Hall, J., and Norton, S. (2008), Economic Freedom of the World 2008 Annual Report, Economic Freedom Network.Google Scholar
Head, C. (2000), ‘Financing of private hydropower projects’, World Bank Discussion Paper No. 420.Google Scholar
Huang, Y., and Barker, T. (2009), ‘The Clean Development Mechanism and sustainable development: a panel data analysis’, Tyndall Centre for Climate Change Research Working Paper no. 130.Google Scholar
IEA (International Energy Agency) (2003), World Energy Investment Outlook, 2003 Insights, Paris: International Energy Agency.Google Scholar
IEA (International Energy Agency) (2008), World Energy Outlook 2008, Paris: International Energy Agency.Google Scholar
Ishiguro, M., and Akiyama, T. (1995), ‘Electricity demand in Asia and the effects on energy supply and the investment environment’, World Bank Policy Research Working Paper No. 1557.Google Scholar
Kaufmann, D., Kraay, A., and Mastruzzi, M. (2008), ‘Governance matters VII: Governance indicators for 1996–2007’, World Bank Policy Research Working Paper No. 4654.Google Scholar
King, R.G., and Levine, R. (1993a)), ‘Finance and growth: schumpeter might be right’, Quarterly Journal of Economics 108: 717–738.CrossRefGoogle Scholar
King, R.G., and Levine, R. (1993b)), ‘Finance, entrepreneurship, and growth’, Journal of Monetary Economics 32: 513–542.CrossRefGoogle Scholar
Levine, R., and Zervos, S. (1998), ‘Stock markets, banks, and economic growth’, The American Economic Review 88 (3): 537–558.Google Scholar
Levine, R., Loayza, N., and Beck, T. (2000), ‘Financial intermediation and growth: causality and causes’, Journal of Monetary Economics 46 (1): 31–77.CrossRefGoogle Scholar
MacLean, J.C., and Siegel, J.M. (2007), ‘Financing Mechanisms and Public/Private Risk Sharing Instruments for Financing Small Scale Renewable Energy Equipment and Projects’, report prepared for UNEP and GEF [Online], http://www.uneptie.org/energy/activities/frm/pdf/SSRE.pdf.Google Scholar
Pacudan, R. (2005), ‘The Clean Development Mechanism: new instrument in financing renewable energy technologies’, in Iacomelli, A. (ed.), Renewable Energies for Central Asia Countries: Economic, Environmental and Social Impacts, Springer, pp. 27–42.CrossRefGoogle Scholar
Painuly, J.P., and Wohlgemuth, N. (2006), ‘Renewable energy financing - what can we learn from experience in developing countries?’, Energy Studies Review 14 (2): 154–170.Google Scholar
Renner, M., Sweeney, S., and Kubit, J. (2008), Green Jobs: Towards a Decent Work in a Sustainable, Low-carbon World, Geneva: UNEP/ILO/IOE/ITUC.Google Scholar
Sonntag-O'Brien, V., and Usher, E. (2004a), ‘Financing options for renewable energy’, Environmental Finance, Renewables Finance special issue, [online], http://www.environmental-finance.com/2004/0504may/financ.htm (posted May 2004, updated July 4, 2008).Google Scholar
Sonntag-O'Brien, V., and Usher, E. (2004b), ‘Mobilising Finance for Renewable Energy, Thematic background paper for the International Conference for Renewable Energies’, Bonn, [Online], http://www.renewables2004.de/pdf/tbd/TBP05-financing.pdf, January 2004.Google Scholar
Tadesse, S. (2002), ‘Financial architecture and economic performance: international evidence’, Journal of Financial Intermediation 11: 429–454.CrossRefGoogle Scholar
Tharakan, P.J., de Castro, J., and Kroeger, T. (2007), ‘Energy sector assistance in developing countries: current trends and policy recommendations’, Energy Policy 35: 734–738.CrossRefGoogle Scholar
Tirpak, D., and Adams, H. (2008), ‘Bilateral and multilateral financial assistance for the energy sector of developing countries’, Climate Policy 8: 135–151.CrossRefGoogle Scholar
UN Commission on Sustainable Development (2007), Report on the fifteenth session, Economic and Social Council Official Records, Supplement No. 9.Google Scholar
UNEP FI (2004), Renewable Energy, United Nations Environment Programme Finance Initiative Climate Change Working Group, CEO Briefing (June 2004).Google Scholar
van Hulle, F., van Roekel, G., de Jongh, J., Borchgrevink, J., Lopez, J. C., and Vindas, E. F. (2003), Evaluation of the environmental impact of the 20MW Tejona wind power project, Costa Rica, ECN report no. ECN-C-02-93.Google Scholar
World Energy Council (WEC) (1980–2007), Survey of Energy Resources, London: World Energy Council.Google Scholar
Williams, J.H., and Ghanadan, R. (2006), ‘Electricity reform in developing and transition countries: a reappraisal’, Energy 31: 815–844.CrossRefGoogle Scholar
Wohlgemuth, N., and Painuly, J.P. (1999), ‘Promoting private sector financing of commercial investments in renewable energy technologies, in Finance for Sustainable Development: Testing New Policy Approaches, United Nations.Google Scholar
World Bank (1999), Energy and Development Report, Washington, D.C.: IBRD/World Bank.Google Scholar
World Bank (2002), Financing for Sustainable Development, Washington, D.C.: IBRD/World Bank.Google Scholar
World Bank (2003), Power for Development: A Review of the World Bank Group's Experience with Private Participation in the Electricity Sector, Operations Evaluation Department, Washington, D.C.: IBRD/World Bank.Google Scholar