Who's Going Green and Why? Trends and Determinants of Green Investment

This paper fills a gap in the macroeconomic literature on renewable sources of energy. It offers a definition of green investment and analyzes the trends and determinants of this investment over the last decade for 35 advanced and emerging countries. We use a new multi-country historical dataset and find that green investment has become a key driver of the energy sector and that its rapid growth is now mostly driven by China. Our econometric results suggest that green investment is boosted by economic growth, a sound financial system conducive to low interest rates, and high fuel prices. We also find that some policy interventions, such as the introduction of carbon pricing schemes, or "feed-in-tariffs," which require use of "green" energy, have a positive and significant impact on green investment. Other interventions, such as biofuel support, do not appear to be associated with higher green investment.Energy;Asia;Climatic changes;Economic models;Energy policy;Energy prices;Greenhouse gas emissions;Public investment;crude oil, fossil fuel, renewable energy, carbon emissions, fossil fuels, gas emissions, green technologies, greenhouse gas, carbon pricing, energy efficiency, fuel prices, green energy, oil prices, wind power, natural gas, carbon tax, econometric results, clean energy, fossil fuel combustion, carbon emission, energy information administration, crude oil price, emission reduction, crude oil prices, alternative energy, renewable resources, natural resources, carbon sequestration, energy source, opec, air pollution, environmental degradation, total energy, environmental regulations, emission trading, climate policy, electricity production, power plant, national energy, greenhouse gases, econometric analysis, solar power, fossil energy, fossil fuel use, fuel switching, gasoline prices, carbon dioxide, higher oil prices, fuel consumption, gasoline price, power generation, efficient lighting, fuel supply, fossil fuel r & d, voluntary basis, energy production, domestic coal, total emissions, fossil fuel supply, energy mix, reducing carbon emissions, fuel woods, acid rain, geological conditions, oil equivalent, wind turbine, weather conditions, diesel fuel, permit trading, offshore wind, green ? energy, fossil fuel energy use, carbon markets, district heating, carbon taxes, carbon economy, photovoltaic power, heating systems, relationship between interest rates, sulfur dioxide, natural gas prices, fuel use, heat production, fuel sources, carbon content, carbon energy, carbon investment, wind turbines, fossil fuel technologies, traditional fossil fuel, organic material, fossil fuel taxation, environmental damage, fossil fuel energy, fossil fuel prices, clean technology, total energy use, fossil fuel sources, efficient electricity, cost abatement opportunities