OECD Environment Working Papers
This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.
- ISSN: 19970900 (online)
- https://doi.org/10.1787/19970900
Sources of Finance, Investment Policies and Plant Entry in the Renewable Energy Sector
This report looks specifically at the full array of public policies promoting investment in the renewable energy sector, and discusses their impact on plant entry into the market, with the support of case studies focusing on Germany, the U.S.A. and Australia. It examines differing risk/return expectations across stages of the investment continuum (from R&D through to mergers and acquisitions) and the financial structures that are employed at each stage. Although transparency, predictability and longevity of government programmes are necessary if investors are to initiate a project in clean energy, predictability should not be mistaken for permanence. In the case where policies target investment in physical capital, it is important to ‘sunset’ many of the policies discussed in this report. It is the nature of entrepreneurship that not all investments in new activities will pay off and not all promotion efforts will be successful. Against such a backdrop, public investment policy will also frequently meet with failure. Combining continuous assessment with policy predictability is a delicate balancing act. Clear criteria for policy evaluation are required, and ideally the criteria for success should depend on productivity.
Keywords: financial risk, renewable energy sources, climate change, asset finance, environmental policy, venture capital, investment policy
JEL:
G24: Financial Economics / Financial Institutions and Services / Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies;
Q54: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Climate; Natural Disasters and Their Management; Global Warming;
G38: Financial Economics / Corporate Finance and Governance / Corporate Finance and Governance: Government Policy and Regulation;
G32: Financial Economics / Corporate Finance and Governance / Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill;
Q42: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Alternative Energy Sources;
Q58: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environmental Economics: Government Policy
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