Foreign direct investments and renewable energy sources: legal analysis of current developments

Which policy instruments attract foreign direct investments in renewable energy?

De-risking Renewable Energy Investments in Developing Countries: A Multilateral Guarantee Mechanism

The article discusses possible ways to increase the level of private investments in renewable energy as a prerequisite for achieving a decarbonized global economy, low-carbon transformation, and climate-resilient growth. As the United Nations has called for, governments should create a level playing field for private investment in renewable energy, as well as use fiscal policy to encourage private sector involvement. While research on renewable energy is abundant and covers topics ranging from unlocking renewable energy investment to the impact of environmental policies on innovation, energy efficiency policies, renewable energy investment policies, and feed-in tariffs, there is little research that examines the determinants of private investment in the renewable energy sector. In contrast to previous literature that focuses on overall green investments, this study distinguishes between private sector and public investments in renewable energy. Using multilevel data from 13 countries for the period 2015-2023, this chapter examines the impact of four fiscal and financial policy instruments, namely: feed-in tariffs, taxes, credits, and grants and subsidies, on private investment in renewable energy. The multilevel model with random interventions and random coefficients provides evidence of the effectiveness of two policy instruments - feed-in tariffs and credits. This study can be useful for policymakers and researchers as it deepens their understanding of the factors that contribute to increased investment in renewable energy. The findings highlight the significance of tailored fiscal policies in catalyzing private sector investment. Feed-in tariffs, which guarantee long-term contracts to renewable energy producers and provide price certainty, have been shown to reduce investment risk, thereby attracting private investors. Credits, which often include tax incentives or low-interest loans, lower the cost of capital for renewable energy projects, making them more financially viable for private entities. The study's methodology involves a robust analysis of multilevel data, allowing for a nuanced understanding of how different policy instruments perform across various national contexts. This approach acknowledges that the effectiveness of fiscal and financial policies may vary depending on country-specific factors such as market maturity, regulatory environment, and economic conditions.

This study considers five regions, i.e., South Asia, South-East Asia, China, Middle Eastern countries, and European countries, and took their data for 15 years. This study makes a significant contribution to the literature by examining the impact of green finance on environmental sustainability. Green finance development is represented by GDP, investment in renewable energy sources, investment in research and development (R&D) for eco-friendly projects, and public–private partnership investment in renewable energy projects. Green financing development in the chosen panel exhibits a distinct geographical cluster effect, with significant regional variances. The most important influencing elements are regional GDP, regional innovation level, and air quality, whereas the degree of financial development and industrial structure optimization are insignificant. The degree of financial development and industrial structure optimization are related to the amount of green finance development mostly via spillover effects. The degree of financial development has a positive spillover impact, but industrial structure optimization has a negative spillover effect. This study reveals that an increase in the production of energy from renewable sources, an increase in R&D, and the evolution of public–private partnership investment in renewable energy reduce CO2 emissions. It is evidenced that green finance in renewable energy sources is necessary to achieve environmental sustainability. There is a strong need to increase green finance in renewable sources to target the minimization of global CO2 emissions. There should be cross-border trade of renewable energy between regions/countries to mitigate CO2 emissions globally. Moreover, this study ranks the regions based on environmental sustainability, which may help researchers and decision-makers to entice foreign direct and private investment in these regions. The implications of the findings of the study suggest that environmental sustainability benefits greatly from green financing and investing in renewable energy sources through public–private partnerships, which represents one of the best ways to ensure environmental sustainability.

As technology and industry moves on, the human being changes life style. Global warming causes by massive using of high carbon dioxide products and transportation. Climate change also affect the life of human being, it brings natural calamities such as flood, powerful typhoon, drought etc.. In recent years, eco-conscious growing makes the governments concern about environmental protection issue. On 11 December 1997, an important international agreement- “The Kyoto Protocol” was adopted, 37 countries (Annex I countries) commit themselves to a reduction of greenhouse gases under the protocol. After signing the Kyoto Protocol, the EU actively legislate a series of policies about environmental protection and climate change to reach the protocol commitment of 8% greenhouse gases reduction. In the meanwhile, the EU strengthens environmental protection conscious of its citizens. Besides, for energy security, the EU also actively researchs in the sector of renewable energies. Nowadays, the EU has become the leader in sector of low-carbon technologies and renewable energies. Renewable energy is energy which comes from natural and renewable resources such as wind, sun light, biomass geothermal energy etc. As with any other renewable energy source solar energy also means less CO2 emissions, and less emphasis on fossil fuels. Many years ago the EU started to research solar energy, today the EU already get enormous success in the solar sector. Germany and Spain are the biggest two photovoltaic installation member states in the EU. Germany is the largest photovoltaic market of the world. The greatest success should be referred to German “Renewable Energy Act (EEG)” which provided remuneration for electricity feed-in. This measure was imitated by other countries. On the other side, because of a series of solar policies and superior geographic location, Spain excellently developed the solar energy in the last decade, and has become the second largest European photovoltaic market in 2008. Although Taiwan has substantial base of semiconductor industry to develop solar technologies, but our government has negative attitude toward renewable policies, it will block the development of the solar industry in the future. In the 1970s, the region of Baden-Wurttemberg planned to build a nuclear power plant at Wyhl, just 30 km from Freiburg. There was a major protest, with widespread civil disobedience, and in 1975 the plans were defeated. During this time, the German federal government decided to gradually suspend using nuclear energy. The successful experiences of Germany and Spain can prove that solar industry was largely depended on the support of government.

This chapter examines key legal instruments and mechanisms relevant to international renewable energy regulation. These play an important role in governing unified action and enhancing collaboration and information-sharing on effective policies and investment frameworks aimed at reducing barriers and risks to investments in renewable energy. The mechanisms that are analysed are the International Renewable Energy Agency (IRENA) Statute, the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol and related international climate change negotiations and declarations, the Energy Charter Treaty (ECT), and various sector-specific treaties. The chapter also turns its attention to the primary international organizations that influence present and future directions in international renewable energy policy, such as the Nairobi Programme of Action for the Development and Utilization of New and Renewable Sources of Energy, International Energy Agency, Development Banks, and the Renewable Energy and Energy Efficiency Partnership.

This chapter discusses the Energy Charter Treaty (ECT) and renewable energy disputes in more detail. It begins with an overview of the framework of national and international regulations in the renewable energy sector. Next, the chapter looks at a recent series of ECT cases filed by investors in the renewable (predominantly solar) energy sector against Bulgaria, the Czech Republic, Italy, and Spain. The chapter compares this recent wave of arbitrations in the renewables sector with the first arbitration award rendered under the ECT, which also concerned incentives to encourage investments for cleaner energy. It concludes with reflections on whether Italy's decision to withdraw from the ECT was influenced by these most recent cases filed against it.

This study examines the impact of foreign direct investments (FDIs) on renewable energy within the Turkish economy. The analysis employs the Johansen cointegration method and the Hacker-Hatemi (2006) bootstrap causality test. The results of these methods indicate that there is no long-term relationship between FDIs and renewable energy. Furthermore, no causality link between these variables has been detected. These findings suggest that FDIs do not affect renewable energy through mechanisms such as technological diffusion or environmental pollution. Therefore, fluctuations in FDIs are unlikely to have either positive or negative effects on renewable energy consumption. These results highlight that the connection between foreign investments and the renewable energy sector in Turkey is limited. Consequently, investment strategies or policy changes in this context are unlikely to produce significant transformations in the renewable energy sector. This situation underscores the need for broader and more comprehensive studies that take into account various factors to better understand the dynamics of foreign direct investments in the energy sector. Additionally, the findings indicate the necessity of developing different strategic approaches and policies to increase investments in renewable energy.

The main objective of this review is to develop renewable energy (RE) sectors and overcome any obstacles regarding this in Bangladesh. Bangladesh has been facing energy crisis in all sectors in need of electricity. The techno-economical and policy making challenges are the main barrier of renewable energy sources installment in Bangladesh. But in recent years, Bangladesh has achieved notable progress in the development of its renewable energy industry. Bangladesh produces 723.26 MW of electricity from renewable sources, which include 67.61% solar, 31.80% hydro, and 0.58% wind, biogas, and biomass. Of these, 489 MW are produced by more than 6 million (63, 25, 278) installed solar cells. This assessment offers a thorough examination of the nation's present renewable energy situation, stressing both the fundamental difficulties and noteworthy successes. The research reviews the many renewable energy sources, such as hydropower, biomass, mechanical vibration, wind, and solar electricity, and assesses how much of each the country needs to use. Analyzing the legal and policy environment that governs renewable energy in Bangladesh, the research highlights the necessity of focused measures to remove current obstacles. It talks about how overcoming obstacles and promoting sustainable growth can be accomplished through international cooperation and financial assistance. The research also looks at the socioeconomic effects of renewable energy programs, considering how they may affect employment and electrification in rural areas. The analysis provides an outlook on the prospects of the renewable energy sector in Bangladesh. Emerging technologies, possible market trends, and innovative prospects are covered. To assist stakeholders, investors, and legislators in navigating the shift to a more resilient and sustainable energy future, recommendations are offered. With an emphasis on highlighting successes and outlining challenges, this research provides a thorough analysis of Bangladesh's renewable energy industry. Bangladesh may establish itself as a regional leader in the adoption of renewable energy sources and support international efforts to mitigate climate change by recognizing the obstacles of the present and laying out a plan for future development. This research will help to the researchers and policymakers for making more renewable energy in Bangladesh without facing any difficulties.

Community participation (CP) is emphasized in the planning and implementation of the various projects and sector. Renewable energy (RE) sector like other sectors requires community participation for its effectiveness and efficiency. This review aims at exploring the community participation in the renewable sector in Tanzania. Five themes were identified for through literature review where a Seven-Step Model for comprehensive literature review was used. These themes include (i) access to information on RE resources; (ii) community awareness of the RE technologies and related policies, laws, and regulations; (iii) RE as the source of employment opportunities; and (iv) RE as an alternative to fossil fuels and for poverty alleviation. These study revealed that despite the different efforts taken by the government and other energy stakeholders the community still lack enough information and awareness about renewable energy technologies, institutional and regulatory framework. However, the interesting issue is that renewable energy sectors play an important role in providing employment opportunities to the local communities. Moreover, the use of renewable energy has contributed to poverty alleviation. For instance, hydropower has an increase in electricity supply, solar energy has improved the local households’ standard of living, education and health services. It is recommended that the government and other energy stakeholders should cooperate to provide more information and awareness of renewable energy technologies to the community. This should be accompanied by the introduction of the national policy and law which is specifically for renewable energy to enable its development. Community participation (CP) is emphasized in the planning and implementation of the various projects and sector. Renewable energy (RE) sector like other sectors requires community participation for its effectiveness and efficiency. This review aims at exploring the community participation in the renewable sector in Tanzania. Five themes were identified for through literature review where a Seven-Step Model for comprehensive literature review was used. These themes include (i) access to information on RE resources; (ii) community awareness of the RE technologies and related policies, laws, and regulations; (iii) RE as the source of employment opportunities; and (iv) RE as an alternative to fossil fuels and for poverty alleviation. These study revealed that despite the different efforts taken by the government and other energy stakeholders the community still lack enough information and awareness about renewable energy technologies, institutional and regulatory framework. However, the interesting issue is that renewable energy sectors play an important role in providing employment opportunities to the local communities. Moreover, the use of renewable energy has contributed to poverty alleviation. For instance, hydropower has an increase in electricity supply, solar energy has improved the local households’ standard of living, education and health services. It is recommended that the government and other energy stakeholders should cooperate to provide more information and awareness of renewable energy technologies to the community. This should be accompanied by the introduction of the national policy and law which is specifically for renewable energy to enable its development.

Kicking the Oil Addiction

Nigeria's energy sector remains heavily reliant on fossil fuels, a dependency that perpetuates environmental degradation, economic instability, and energy insecurity despite the country's vast renewable energy potential. This imbalance is influenced by macroeconomic challenges, such as fluctuating exchange rates, high inflation, and prohibitive interest rates, alongside insufficient policy frameworks and a lack of affordable financing mechanisms. As the largest economy in Africa, Nigeria's inability to attract significant investment in renewable energy hinders progress toward achieving energy diversification, and addressing critical energy access challenges for its growing population. The window to transit to cleaner energy sources holds a great future for our developing economy (Oyegbile et al., 2024). This study assesses the determinants of investment in Nigeria's renewable energy sector using a Vector Error Correction Model (VECM) framework, analyzing short- and long-term dynamics between key indicators such as Gross Domestic Product (GDP), inflation rate, foreign direct investment (FDI), exchange rate, interest rate, energy consumption patterns, electricity access rate, and renewable energy policies. The research employs time-series data from 1990 to 2022, sourced from reputable institutions including the World Bank, International Energy Agency (IEA), and the Central Bank of Nigeria (CBN). Augmented Dickey- Fuller(ADF) stationarity tests confirm the properties of the data, while the Johansen Cointegration Test establishes long-term equilibrium relationships. The VECM framework is supplemented with impulse response functions (IRFs) and variance decomposition analysis (VDA) to uncover dynamic interactions among the variables. The findings revealed that GDP growth (+1.31, p < 0.01) significantly drives renewable energy investment, while unfavorable exchange rates (−0.49, p < 0.05) and high-interest rates (−0.58, p < 0.05) hinder progress. Renewable energy policies emerge as critical enablers, while inflation (−0.35, p < 0.05) exerts a dampening effect. Impulse response analysis reveals that a 1% positive shock in FDI inflows results in a 0.91% increase in renewable energy investments over five years, with variance decomposition attributing 47% of forecast errors in investment trends to GDP shocks and to policy changes. These findings thereby underscore the urgency for stable macroeconomic policies, targeted financial incentives, and robust policy frameworks to drive investment in Nigeria's renewable energy sector while also providing critical insights into the pathways for transitioning Nigeria toward a sustainable energy future, addressing key economic, social, and environmental challenges while contributing to the global discourse on energy economics and investment strategies.

The multilateral Energy Charter Treaty was concluded in the early 1990’s with the purpose of stimulating trade and investment in the energy sector between Western European countries and the countries of Eastern Europe and the former Soviet Union. To that end, rules were established regarding trade, investment, and the transit of energy. This dissertation examines the role that the treaty can play in the current energy transition, by analyzing how it can contribute to the facilitation of investments in the renewable energy sector. The main emphasis in this dissertation is on the investment chapter, which is in practice frequently invoked by renewable energy investors. By reference to economic theories and the business practice in the renewable energy sector, this dissertation comes up with various recommendations that could be considered in the recently initiated modernization process of the treaty. Since the investment chapter is analyzed against the wider background of international economic law, the recommendations conform to contemporary policy tendencies, as preferred by the Energy Charter Conference during the modernization process. Amongst the recommendations is that rules regarding investment protection are of great importance in the renewable energy sector, as practice already demonstrates, but that these should be accompanied by rules concerning investment promotion. Ideally, these rules would be concluded in the context of a broader agreement that also regulates trade, in both goods and services, since investment and trade in the renewable energy sector are closely interrelated.

The article examines the current state and trends of investing in the development of renewable energy sources and waste-free biogas technologies in agriculture. Investing in biogas plants for large agricultural enterprises solves several problems at once. One of the most important is the processing of waste, which is especially important for livestock complexes. The volumes of global investments in renewable energy sources and biofuels in 2011–2021 are analyzed and determined that 2021 was a record year in terms of total investment in the energy transition, and in terms of investment in renewable energy and biofuels. China and Europe remain the leaders in investing in renewable energy and biofuels in 2021. In recent years, there has been an upward trend in domestic investment in renewable energy and biofuels, but their volumes are still at a low level. Investing in any market, regardless of the presence of international representatives on it and the probable inclination of the business to risk, is a rather difficult decision. The initial stage in deciding to enter the Ukrainian market, the investor must choose and develop a clear and unambiguous investment strategy through a thorough risk assessment. Three possible scenarios for an investor to enter the renewable energy and biofuels market have been identified: creation of a new company from scratch (greenfield), acquisition of an existing company; acquisition of existing production. Also, on the basis of the most cost-effective scenario – the creation of a new company from scratch (greenfield) – an assessment of the economic efficiency of investing in waste-free biogas technologies in agriculture was carried out. Based on the results of the study, five areas have been identified to stimulate investment in renewable energy sources in general and biogas waste-free technologies in particular. Increased investment in the renewable energy sector will allow Ukraine to produce additional volumes of electricity that can be exported to Europe in exchange for Russian energy resources. Despite global trends, many investors have suspended support for renewable energy projects due to the state’s failure to fulfill its obligations and the retrospective reduction of “green” tariffs without launching an alternative in the form of “green” auctions.

Exploring citizens' decision to crowdfund renewable energy projects: Quantitative evidence from France