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Finance for renewable energy: an empirical analysis of developing and transition economies

Published online by Cambridge University Press:  26 February 2010

CHRISTA N. BRUNNSCHWEILER
CHRISTA N. BRUNNSCHWEILER*
Affiliation:
CER-ETH – Center of Economic Research at ETH Zurich, Zuerichbergstrasse 18, 8092 Zurich, Switzerland and OxCarre, University of Oxford. Email: cbrunnschweiler@ethz.ch
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Abstract

This paper examines the role of the financial sector in renewable energy (RE) development. Although RE can bring socio-economic and environmental benefits, its implementation faces a number of obstacles, especially in non-OECD countries. One of these obstacles is financing: underdeveloped financial sectors are unable to efficiently channel loans to RE producers. The influence of financial sector development on the use of renewable energy resources is confirmed in panel data estimations on up to 119 non-OECD countries for 1980–2006. Financial intermediation, in particular commercial banking, has a significant positive effect on the amount of RE produced, and the impact is especially large when we consider non-hydropower RE such as wind, solar, geothermal and biomass. There is also evidence that the development of the RE sector has picked up significantly in the period since the adoption of the Kyoto Protocol.

Type
Research Article
Information
Environment and Development Economics , Volume 15 , Issue 3 , June 2010 , pp. 241 - 274
Copyright
Copyright © Cambridge University Press 2010

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