Green Financing After the
Global Financial Crisis
Financial investment in new sustainable energy has grown very rapidly over the past few years with a compound average annual growth rate of 29 percent between 2004 and 2009. This growth rate is very impressive, given that 2008 marked the largest decline in global economic activity since the great depression of the 1930s. As the global economy recovers from the recession of 2008–2009, questions arise as to what the economic recovery will look like and how the economic recovery will affect green financing. This chapter looks at four economic recovery scenarios (U-shaped recovery, v-shaped recovery, stagflation, deflation) and the impacts that each of these scenarios will have on the future of green financing. Some suggestions are also presented as to which economic indicators to follow for signs of which of these scenarios is most likely to unfold.
The global recession of 2008 came at a precipitant time for green financing. After several years of double-digit growth, green financing, described in this chapter as new investment in global sustainable energy, slowed considerably between 2008 and 2009. In 2009, investment in the new global sustainable energy market reached $162 billion, but this was 7 percent lower than the year earlier (New Energy Finance 2010). This number includes government and corporate research and development (R&D) spending and financial (equity, bond, and venture capital) investments. The global economic recession has
I thank Paul Shrivastava, Matt Statler, and Irene Henriques for their very helpful comments.