Sovereign green bonds in practice: effectiveness as a climate finance instrument in emerging economies

Asian economies are often characterized as having bank-dominated financial systems and underdeveloped capital markets, in particular with regard to venture capital. In economies that banks are the main source of funding, the main obstacle for financing infrastructural projects including renewable energy (RE) projects is lack of access to long-term finance. The second obstacle for development of RE energy projects is their lower rate of return comparing to fossil fuel projects as more subsidies are globally going to fossil fuels. For larger RE projects insurance and pensions are sustainable financing alternatives. Pension funds and insurance companies hold long-term savings, so these institutions could be a proper alternative for financing mega-size RE projects. In addition, utilizing the spillover effects originally created by energy supplies in form of tax revenues refund to RE projects will increase their rate of return and make them interesting for private investors. For smaller-size RE projects, the paper provides a theoretical model for combining utilisation of carbon tax and a new way of financing risky capital, i.e., Hometown Investment Trust Funds (HITs). The paper theoretically shows that by environmental taxation and allocating these tax revenues to HITs, RE projects will become more feasible and more interesting for private investors; hence the supply of investment money to these funds will increase.

This research examines the relationship between climate finance, growth in climate investors and growth in climate assets for low emission development. It also evaluates the effect of climate policy evolution on the growth of climate investors and climate assets. Adopting a positivist paradigm, the paper makes use of a quantitative research approach and applies the causal and correlational research design. The paper made use of secondary data from the World Bank Carbon Finance Unit and from the Carbon Disclosure Project (ADP). The major objective was to examine the combined effect of climate finance and climate policy on the growth of carbon investors and carbon assets for the companies in the Carbon Disclosure Project which includes the 100 JSE companies. Findings from the test reveal that the combined effect of growth in climate finance and climate policy evolution has a significant relationship with growth in climate investors and climate assets. Given this result the paper proceeded to examine if the growth in climate finance has any correlation with South Africa’s emission reduction trend. Results however indicate that South Africa’s GHG emission trend does not correlate with climate finance availability; GHG emissions in South Africa have continued to soar despite a seeming growth in climate finance. The paper reasoned that the global climate finance might not be effectively available to corporates in South Africa at the expected level of financing to initiate the expected level of climate investment to effect a significant reduction in greenhouse gas emissions. This confirms literature assertions that global climate finance might not easily be accessible, at least to entities in developing countries. In conclusion, the paper suggests the establishment of a Southern African Climate Finance pool where the public and private sector can contribute and that such pool should be made easily available to carbon investors at a cheap rate with alluring tax incentives to funders and beneficiaries. The paper adds a modest nuance to the literature as no know previous research has dwelt specifically on the unique relationship of climate finance, climate policy and climate investors. The paper’s implication is beneficial to green policy officials and for academic debate. It suggests an avenue for further research about climate investors’ handicap in accessing global climate finance and to explore logistics to develop independent South African based climate finance.

Business models and innovativeness of potential renewable energy projects in Africa

This study examines the evolving role of USA community banks in financing renewable energy (RE) projects, investigating how these institutions have adapted their traditional lending practices to support clean energy initiatives. The research aims to analyze the integration of Environmental, Social, and Governance (ESG) factors into community bank lending decisions, identify key drivers and barriers influencing their participation in renewable energy financing, and assess the broader socioeconomic and environmental impacts of their involvement in the clean energy transition. The study employs a mixed-methods approach combining document analysis of policy frameworks and financial data, industry trend analysis, and examination of community bank lending portfolios. The research methodology includes analysis of regulatory changes, policy incentives, and their impact on community bank lending behaviors, alongside assessment of financing patterns across different renewable energy project types and geographic regions. Data sources encompass federal banking regulations, industry reports, community bank financial statements, and renewable energy project financing records. The research reveals that community banks have increasingly integrated ESG considerations into their lending practices, driven by factors including community relations enhancement, brand reputation building, regulatory compliance, and policy incentives. Community banks demonstrate significant advantages in renewable energy project financing, particularly in rural areas, due to their strong local relationships, understanding of regional market conditions, and ability to provide flexible financing solutions during relevant project development phases. However, the study identifies persistent challenges, including limited technical expertise in evaluating renewable energy projects, complex regulatory frameworks, and inadequate risk assessment tools. The analysis confirms substantial environmental benefits from community bank-financed renewable energy projects, including measurable carbon emission reductions, enhanced local energy security, job creation, and strengthened community resilience. Notwithstanding these positive outcomes, the research highlights the need for improved technical capacity building and more sophisticated risk management frameworks. In conclusion, Community banks play a significant role in advancing clean energy goals across the United States, particularly in underserved rural markets where traditional financial institutions have limited presence. Keywords: Community Banks, Renewable Energy Financing, Sustainable Development, Environmental and Social Impact.

[EN] Academics, managerial and policy making community reinforce that renewable energy investments are one of the most effective instruments to attain CO2 emission reduction targets set by the Kyoto Protocol and by the recent Paris Agreement signed at the Paris climate conference (COP21) in December 2015 in which 195 countries adopted the first-ever universal, legally binding global climate deal. The problem of financing Renewable Energy (RE) projects has become a crucial issue for private and public decision makers worldwide. Budget constraints from governments and limited bank lending capacities have led to a reconsideration of the traditional financial instruments in the RE sector. The lack of credit makes impossible for commercial banks to fund RE projects with traditional loans. Research on new financing techniques for RE projects, such as Project Finance (PF) has gained interest in recent years. PF is a recent technique applied in large investments projects. During the last decades of the 20th century new public private partnership schemes enabled large infrastructure, energy and environmental projects. In these sectors PF has been used to reduce cost agency conflicts and better risk management. There is a wide number of contributions underlying the relevance of RE, however there is a lack of research on the financial aspects of RE projects. This research aims to make several contributions. First, to provide a better understanding of the PF technique and its use in the RE sector. Second, to fill the gap of research on financial aspects of RE in the literature by reviewing contributions of MCDM to RE project evaluation from the investor's perspective. Third, we propose a MPDM Moderate Pessimism Decision Making model, which adds to the rational financial evaluation of investment opportunities a set of non-financial factors that affects the investor's decisions. Finally, within the illustrative example, we apply this multi-criteria decision making process to help banks to decide if they must join a project or not.; [ES] Investigadores, comunidad empresarial y clase politica destacan que la inversion en energias renovables es uno de los instrumentos mas efectivos para alcanzar los objetivos de reduccion de CO2 establecidos por el reciente acuerdo firmado en la conferencia de Paris (COP21) en diciembre de 2015, en el cual, 195 paises adoptaron el primer acuerdo universal y juridicamente vinculante de la historia. El problema de la financiacion de los proyectos de energia renovable (RE) es un tema crucial para cualquier decisor publico o privado. Las limitaciones presupuestarias de los gobiernos y la falta de credito han provocado que se reconsideren los instrumentos de financiacion en el sector de las RE, por lo tanto, la investigacion en nuevas tecnicas de financiamiento para los proyectos de RE, como Project Finance (PF) ha ganado interes en los ultimos anos. PF es una tecnica que se aplica en grandes proyectos de inversion. A finales del Siglo XX, los nuevos esquemas de colaboracion publico-privadas han…

The main obstacle to the development of Renewable Energy (RE) projects is lack of access to finance. Electricity tariff is often regulated by the government, hence, to increase the investment incentives the spill over effects originally created by energy supplies need to be used. Tax revenues are refunded to the investors in energy projects and such fiscal policy reform will increase the rate of return of energy projects. For smaller-size energy projects, this chapter provides a theoretical model for combining utilisation of carbon tax and a new way of financing risky capital, i.e., Hometown Investment Trust Funds (HITs). Because of the Basel capital requirement, and because most RE projects from the point of view of financers are considered to be risky projects, and thus many financers are reluctant to lend to them or they lend at high interest rates. This chapter theoretically shows that by taxing carbon dioxide (CO2), sulphur dioxide (SO2), and nitrogen oxides (NOx) and allocating those tax revenues to HITs, RE projects will become more feasible and more interesting for hometown investors, hence the supply of investment money to these funds will increase.

This paper provides a concise overview of the comprehensive examination undertaken to assess climate finance strategies associated with renewable energy projects in Africa. The continent, endowed with abundant renewable resources, faces the dual challenge of meeting its rising energy demand while addressing climate change concerns. This review delves into the diverse landscape of renewable energy initiatives across Africa, emphasizing the pivotal role of climate finance mechanisms in driving sustainable development. The study explores a myriad of renewable energy projects, encompassing solar, wind, hydro, and geothermal technologies, implemented to mitigate the environmental impact of conventional energy sources. It investigates the financial instruments deployed to support these projects, including international funds, grants, loans, and public-private partnerships. The analysis considers the effectiveness of climate finance in fostering the adoption and scaling-up of renewable energy solutions within the unique socio-economic contexts of African nations. Furthermore, the research investigates challenges and opportunities associated with climate finance strategies in the African renewable energy sector. Common barriers, such as regulatory frameworks, institutional capacity, and market dynamics, are examined, alongside success stories that highlight innovative financing models and project implementations. The study also sheds light on the role of regional collaborations and the involvement of local communities in ensuring the sustainability and resilience of renewable energy projects. In addition, the review critically assesses the alignment of climate finance strategies with international climate goals, including the Paris Agreement. It analyzes the extent to which these strategies contribute to both mitigating greenhouse gas emissions and promoting adaptation measures in the face of climate change impacts. The findings aim to provide policymakers, investors, and stakeholders with valuable insights into refining and enhancing climate finance strategies for a more impactful and inclusive renewable energy transition in Africa. This review synthesizes a comprehensive understanding of the current state of renewable energy projects in Africa, emphasizing the critical role played by climate finance in advancing sustainable development. The insights generated from this analysis contribute to the ongoing discourse on effective climate finance strategies, offering a roadmap for fostering resilient and low-carbon energy systems on the African continent.

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

• Renewable energy (RE) projects in Indonesia usually have IRR between 10% and 15% and PP around 6 to 30 years • Attractive return usually could be found in large scale RE projects, although there are numerous other factors involved including technology developments, capacity scale, power purchasing price agreements, project locations, as well as interest rates and applied incentives. • Crowdfunding (CF) has big potential to contribute to the financing of RE projects especially financing small scale RE projects. • P2P lending usually targeted short-term loans with high interest rates. Therefore, it cannot be employed as an alternative financing for RE projects in Indonesia. • Three types of CF that can be employed as an alternative for RE project funding in Indonesia. Namely, securities, reward, and donation-based CF. In addition, hybrid models such as securities-reward and reward-donation could also be explored according to the project profitability. • Several benefits offer by securities crowdfunding (SCF) compared to conventional banking and P2P lending, as follows: (1) issuer do not need to pledge assets as collateral; (2) do not require to pay instalment each month; (3) issuer share risks with investors with no obligation to cover the investor’s loss; (4) applicable for micro, small, medium, enterprises (MSMEs) with no complex requirements; and (5) there is possibility to attract investors with bring specific value. • Several challenges that need to be tackled such as the uncertainty of RE regulations; (1) issuer’s inability in managing the system and business; (2) the absence of third parties in bridging between CF platform and potential issuer from RE project owner; (3) the lack of financial literacy of the potential funders; and (4) lastly the inadequacy of study regarding potential funders in escalating the RE utilisation in Indonesia.

Geotechnical assessments are crucial for ensuring the stability and longevity of renewable energy infrastructure, particularly in wind and solar projects. This review explores the significance of geotechnical assessments in these projects, highlighting key considerations and challenges. Geotechnical assessments play a critical role in the design, construction, and operation of renewable energy infrastructure, providing essential information about the subsurface conditions that can impact the stability and performance of wind and solar projects. These assessments involve the evaluation of soil, rock, and groundwater conditions to assess their suitability for supporting renewable energy structures. In wind energy projects, geotechnical assessments are essential for determining the foundation design of wind turbines. The soil and rock conditions at the site can significantly impact the stability and load-bearing capacity of the foundation, affecting the overall performance and safety of the turbine. Similarly, in solar energy projects, geotechnical assessments are necessary for designing the foundation of solar panels and support structures, ensuring they can withstand environmental loads and maintain their efficiency over time. One of the key challenges in geotechnical assessments for renewable energy projects is the variability of subsurface conditions. Soil and rock properties can vary significantly over short distances, requiring detailed site investigations to accurately characterize the subsurface conditions. Additionally, the presence of natural hazards such as landslides, earthquakes, and floods can further complicate geotechnical assessments, necessitating robust risk mitigation strategies. Despite these challenges, geotechnical assessments are essential for ensuring the long-term stability and performance of renewable energy infrastructure. By providing valuable insights into subsurface conditions, these assessments help developers and engineers make informed decisions about site selection, foundation design, and risk management, ultimately contributing to the successful implementation of renewable energy projects. In conclusion, geotechnical assessments are vital for ensuring the stability and longevity of renewable energy infrastructure, particularly in wind and solar projects. By providing crucial information about subsurface conditions, these assessments help mitigate risks and ensure the safe and efficient operation of renewable energy projects. Keywords: Geotechnical Assessments, Renewable Energy, Infrastructure, Stability, Wind and Solar Projects.

Renewable energy (RE) projects are vital to achieving sustainable development in the context of the pressing challenges of climate change and the energy transition. However, despite the global consensus on their importance, RE projects often encounter significant resistance at the local level. This article investigates how territorial characteristics influence the social acceptability of RE projects and explores the concept of fertile ground as a framework for understanding the conditions that foster or hinder local support for such projects. Drawing on theories of regional path dependency and leadership agency, we identify the historical, socioeconomic, cultural and governance factors shaping local attitudes towards RE projects. By employing qualitative methods, including semi-structured interviews with diverse stakeholders and the analysis of press articles, we develop a nuanced approach that incorporates key territorial dynamics. Our findings reveal the critical role of historical industrial conflicts, political leadership, place attachment and perceptions of fairness in shaping local acceptability. They also highlight the influence of habituation and saturation effects, which shows that the acceptability of RE projects is not static; rather, it evolves over time in response to local conditions and stakeholder engagement. By situating the fertile ground concept within broader frameworks of social acceptability, this study provides actionable insights to policymakers and project developers seeking to align RE initiatives with local contexts and values.

Renewable energy (RE) projects are increasingly contested. We present bio- and wind energy projects in Argentina, Mexico, and Nicaragua with reference to different frameworks of justice. We bridge the concept of energy justice with insights from climate change and climate justice research and argue that the social groups facing energy injustices related to the implementation of RE projects face a situation of ‘triple inequalities of decarbonisation policies’: they are negatively affected by climate change although, from a global and historical perspective, they have not contributed much to it, and now face injustices related to the mitigation of climate change. We underscore this argument by presenting cases of wind energy generation and biomass production for fuel. We conclude that relating different strands of justice debates with a historically grounded analysis of triple inequalities can imply the denial of RE projects by actors who belong to marginalised groups – despite of a global urgency of decarbonisation.

Renewable energy (RE) projects are often impacted by external environmental factors that cannot be predicted precisely. Conventional risk management relies solely on predicting risks and subsequently, implementing control measures. Since all risks cannot be predicted, this approach is not suitable for RE projects. Holling’s resilience theory explains that systems resist and/or recover from unexpected events due to certain features that enable them to do so. Therefore, building the capacity to succeed despite unexpected events is a more productive pursuit than risk prediction. Through this theoretical lens, a novel risk management model for integrating resilience into RE projects was developed by adapting the Swiss cheese model (SChM). This was then evaluated in a two-stage expert interview with a total of 35 participants. Results confirm the suitability of the SChM as the conceptual basis for the model, and the model’s satisfactoriness in terms of presentation, logic, adequacy, completeness, and adaptability. The model complements conventional risk management by providing a platform for assessing the resilience of RE projects to unexpected events and mapping any weaknesses to control measures. This study extends Holling’s resilience theory from ecological systems to RE projects, and the application of SChM from accident prevention to risk management.

Financing for renewable energy projects: A decision guide by developmental stages with case studies

Our paper focuses on assessing the role of state funding in supporting wind energy projects with a focus on economic efficiency and risk assessment. In particular, we analyze the new program aimed at supporting Russian renewable energy (RE) projects envisaged for the period from 2024–2035 that involves a reduction in investments in such projects and the introduction of large fines for non-compliance with regulatory requirements for localization and export. These strict rules imposed by the regulatory authorities, as well as the withdrawal by foreign manufacturers of equipment for renewable energy from the domestic energy market, put into doubt the economic feasibility of the participation of sector players in state-supported programs. Our paper assesses the economic justification for the practicality of the Russian energy market to implement renewable energy projects under the influence of negative environmental factors and the reduction of state support programs. We employ a case study of wind energy projects carried out in 2018–2020 as a part of the first sector support program. Our methodology is based on the calculations of the classical indicators of economic efficiency of projects (NPV, IRR, and DPP). Our own approach reveals that these indicators are supplemented by taking into account the cost of specific political, environmental, and economic risks of wind energy projects. Our results reveal that, at the moment, Russian wind energy projects in various scenarios retain a sufficient margin of financial strength and are able to withstand a reduction in the amount of financial support from the state. Our findings allow the formulation of some practical recommendations for reducing the share of governmental support for wind energy projects on the local energy market as a measure of cutting costs and increasing overall economic efficiency.