Sources of Finance in the Clean Technology Sector: Capital Structure, Financial Intermediation and Industry Life Cycle

Abstract

In this paper, we discuss capital commitments from different sources of finance that are used in several key countries worldwide to finance clean technologies (CT). In the course of our analysis, we first elaborate on findings from literature that address the importance and implications of different sources of corporate finance including venture capital, private equity, corporate debt, public equity markets, acquisition finance and government grants. Second, we provide data on the volume of capital that has been invested in firms operating in the CT sector from different sources of finance during the period from 2002-2012. In addition to corporate sources of finance, we also elaborate on CT asset finance used to fund infrastructure projects. We find that the business life cycle concept is in large parts transferable to the industry level. Moreover, the data suggest the presence of interdependencies between different types of corporate finance as well as between corporate finance and infrastructure finance. Our results have implications for firms in the CT sector seeking capital as well as for policy makers. We conclude with an interpretation of the capital flows regarding their impact on the CT sector as a whole and provide an outlook of futures avenues of research in this field.