Climate finance and technological change

The financial sector plays an important role for the energy sector by allocating capital based on an assessment of risks and expected returns. This is particularly true for many new low-carbon technologies, which are more capital-intensive than the incumbent high-carbon solutions.

Hence, in the research area “climate finance and technological change”, we study the role of finance for technological change in the broader energy sector, considering private actors such as banks, institutional investors, and venture capitalists, as well as public financial institutions like green state investment banks and multilateral development banks. We are also interested in (green) financial regulation to the extent that it affects technology choices.

Methodological approaches in this research area comprise microeconomic theory, qualitative theory-building, descriptive and causal quantitative data analysis, and policy analysis. We also collaborate with various teams maintaining technology-rich integrated assessment models for a better reflection of financial aspects in these models. An important metric we typically consider is the (sector- and technology-specific) cost of capital, maintaining cost of capital databases that are widely used in academic research.

Ongoing research projects in this area include

external page GREENFIN: Effective Green Financial Policies for the Low-Carbon Transition (ERC Starting Grant, Horizon2020)

external page NEW PATHWAYS for Equitable Climate Action in Line with the Paris Agreement and Sustainable Development (HorizonEurope)

external page PRISMA: Net zero pathway research through integrated assessment model advancements (HorizonEurope)

external page SWEET: EDGE - Integration of decentralized supply of renewable energy into the Swiss energy system (Swiss Federal Office of Energy)