Effective green financial policies for the low carbon transition
Mitigating dangerous climate change requires a fundamental transition of global economies. This transition calls for an annual investment of 2–4 trillion USD, which is a multiple of current climate investment. Accordingly, the EU...
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Descripción del proyecto
Mitigating dangerous climate change requires a fundamental transition of global economies. This transition calls for an annual investment of 2–4 trillion USD, which is a multiple of current climate investment. Accordingly, the EU and many countries are enacting green financial policies, intervening in the financial sector to improve financing conditions for low-carbon technologies. Examples include green state investment banks, carbon disclosure requirements, and changes to lending regulations. However, the effect of these financial policies on investments in non-financial sectors such as energy, transport, or building is largely unknown. More specifically, we lack insights on how different low-carbon technologies require different types of finance (such as public vs. private finance, corporate vs. project finance, or equity vs. debt). Hence, it remains unclear how to make best use of such policies to fill the climate finance gap. By bridging disciplines and using novel data, GREENFIN will lead to a breakthrough in our understanding of the effects of financial policies on the low-carbon transition in non-financial sectors, and thereby lay the foundations for a new interdisciplinary field of financial policy analysis. First, combining theory from technology innovation studies and financial economics, I will derive how technology-inherent characteristics predict the demand for different types of finance. Second, using policy analysis tools and novel machine learning-based methods, I will analyze the effects of green financial policies on the supply of various types of finance. Third, combining these insights I will deliver specific recommendations for designing more effective green financial policies in the EU and beyond. By including financial policies in policy mix analyses, GREENFIN will crucially increase the overall analytical power of public policy analysis, which is all the more important given the ever-growing role of the financial sector in modern economies.
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