Closing the green finance gap – a systems perspective

Hafner, Sarah and Jones, Aled and Anger-Kraavi, Annela and Pohl, Jan (2020) Closing the green finance gap – a systems perspective. Environmental Innovation and Societal Transitions, 34. pp. 26-60. ISSN 2210-4232

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Meeting its climate policy objectives requires the UK to rapidly decarbonise its energy sector. This demands high levels of investments into low carbon energy infrastructure, which are currently not undertaken at required scale, leading to a green finance gap. We explore (1) key investment barriers, (2) a theoretical framework for investigation and (3) possible solutions, drawing on a review of academic literature and policy reports, and interviews conducted with financial investors and experts. Our study confirms that policy uncertainty and short-termism in the financial system are the two main investment barriers. Our results show that identified barriers form a complex system characterised by path-dependency, lock-in and non-linearity. We recommend the adoption of systems theory as an analytical framework to inform the related policy debate and propose the expansion or development of sustainable investment vehicles as a useful near-term solution while preparing a long-term policy intervention based on a systems perspective.

Item Type: Journal Article
Keywords: Energy transition, green finance gap, low-carbon investments, green investment barriers review, systems thinking, complexity
Faculty: Faculty of Science & Engineering
SWORD Depositor: Symplectic User
Depositing User: Symplectic User
Date Deposited: 19 Nov 2019 09:38
Last Modified: 09 Sep 2021 18:53

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