Luc Eyraud, Mr. Abdoul A Wane, Ms. Changchang Zhang, and Mr. Benedict J. Clements
of G reen E nergy S ources
A. Green and Brown Energies
Although this paper will focus mainly on financial investment (in Section IV ), this section briefly analyzes energy generation data in order to assess the scale of greenenergy sources (nuclear and renewables) relative to conventional, or “brown,” ones (coal, gas, and oil). This section shows that renewables play an important role in electricity and more generally in energy generation, due to the traditional use of hydropower and biomass. 11
In 2008, about one-third of
Luc Eyraud, Ms. Changchang Zhang, Mr. Abdoul A Wane, and Mr. Benedict J. Clements
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.