The multiple roles of state investment banks in low-carbon energy finance: An analysis of Australia, the UK and Germany

By A. Geddes, Tobias S. Schmidt, Bjarne Steffen. 2018

260 citations recorded by the source corpus.

Low-carbon energy technologies (renewable energy and energy efficiency) are considered essential to achieve climate change mitigation goals, so a rapid deployment is needed. However there is a significant financing gap and many policymakers are concerned that investment for the large-scale deployment of low-carbon technologies will not materialise quickly enough. State investment banks (SIBs) can play a key role in closing this finance gap and leverage additional private finance. Based on 52 interviews, this paper presents empirical evidence on the role of three SIBs in addressing the barriers to financing low-carbon energy projects; the Clean Energy Finance Corporation (CEFC) in Australia, the Kreditanstalt fuer Wiederaufbau (KfW) in Germany and the Green Investment Bank (GIB) in the UK. We investigate the activities and financial instruments offered by SIBs and compare these to the need for such from low-carbon developers when sourcing finance. Findings show that aside from capital provision and de-risking, SIBs take a much broader role in catalysing private investments into low-carbon investments, including enabling financial sector learning, creating trust for projects and taking a first or early mover role to help projects gain a track record.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/cde69a7a590242cf72e87e2a2e2f79e3460e0ebd

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Citations in the corpus

A review of studies on green finance of banks, research gaps and future directions (2021, background): “Traditionally, banks play the major roles of creating, allocating and circulating funds in an economy but these roles are shifting with the need to implement green financial policies (Geddes, Schmidt, and Steffen 2018).”
How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective (2019, background): “Especially for novel technologies [79,80] and in emerging economies [27], this instrument has been proven to reduce risks.”
Climate finance and disclosure for institutional investors: why transparency is not enough (2019, background): “…finance—often through development banks, like the KfW in Germany—has been prominent in the funding of low-carbon investment; the role of institutional investors, in particular insurers and pension funds, is still very limited (Geddes et al. 2018; Mazzucato and Semieniuk 2018; Buchner et al. 2017).”
Can Sustainable Investing Save the World? Reviewing the Mechanisms of Investor Impact (2020, background): “Geddes et al. (2018) argue that enabling financial sector learning is an important way in which development banks encourage private investments in low-carbon energy generation.”