Implications of Fiscal and Financial Policies on Unlocking Green Finance and Green Investment

  • Dina AzhgaliyevaEmail author
  • Zhanna Kapsalyamova
  • Linda Low
Living reference work entry
Part of the Sustainable Development book series (SD)


Private investment in renewable energy must be scaled up to achieve decarbonization of the global economy, low carbon transformation, and climate-resilient growth. The United Nations advocates that governments should create a level playing field for private investment in renewable energy, where fiscal policies shall be used to incentivize engagement from the private sector. While the studies on renewable energy are abundant and range from unlocking renewable energy investment to effects of environmental policies on innovation, energy efficiency policies, investment policies in renewable energy, and adoption of feed-in tariffs, studies that uncover the determinants of private investment in the renewable energy sector are limited. Unlike the previous literature, which is concentrated on the total green investment, this chapter distinguishes private sector investment and government investment in renewable energy. Using multilevel data from 13 countries over the period 2004–2016, this chapter investigates the impact of four fiscal and financial policy instruments, namely (1) feed-in tariffs, (2) taxes, (3) loans, and (4) grants and subsidies, on private investment in renewable energy. Estimation using multilevel random intercept and random coefficient model provides evidence of the effectiveness of two policy instruments, feed-in tariffs and loans. This study could benefit policymakers and researchers in understanding the factors enabling a scale-up of renewable energy investment.


Private investment Feed-in tariff Fiscal policy Green investment Government investment Renewable energy 

JEL Classification

Q58 Q42 H30 


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Copyright information

© Asian Development Bank Institute 2019

Authors and Affiliations

  • Dina Azhgaliyeva
    • 1
    Email author
  • Zhanna Kapsalyamova
    • 2
  • Linda Low
    • 3
  1. 1.Energy Studies InstituteNational University of SingaporeSingaporeSingapore
  2. 2.School of Humanities and Social Sciences, Environment and Resource Efficiency ClusterNazarbayev UniversityAstanaKazakhstan
  3. 3.Singapore University of Social SciencesSingaporeSingapore

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