Banking on Paris: The roles of public green banks in the transition to net zero emissions

Abstract

Meeting the Paris Agreement goals will require massive public and private sector investments across all sectors of the economy. Using public finance to mobilise additional private sector investment in clean energy investments will be vital. This dissertation investigates the roles of public financial institutions, particularly green banks, in mobilising additional private finance for the net zero transition.

The dissertation addresses important gaps in the literature. It makes empirical, conceptual as well as some methodological contributions. Little comparative analysis has been undertaken of public financial institutions mobilising additional private sector investment for climate change. Empirical data on green banks is rare because they are a nascent form of institution, and existing datasets do not capture the technological and financial innovation which underpins their organisational mission. This dissertation begins to fill this gap, adopting a mixed methods approach underpinned by 65 interviews with experts around the world, a systematic literature review and development of a novel dataset exploring the role of Australia's Clean Energy Finance Corporation (CEFC) in accelerating technological and financial innovation in Australia's large-scale solar sector. Theoretically, it draws on economics, institutional political economy and public management theory. It is focused on three key concepts; market failure, market shaping and public value.

The dissertation examines the history and development of public green banks, their potential application in developing markets, and how they could operate at the multilateral level. In doing so, it sheds light on the roles of green banks, barriers to investment in scaling up climate finance in different kinds of developing markets, and the capacity of the existing international financial architecture to scale up climate change investment in the Indo-Pacific. It finds green banks play an important role in mobilising additional private sector investment for climate change, that they are perceived to create public value through their investments, and their knowledge-sharing and transparency functions have valuable lessons for other public financial institutions.

Chapters in this thesis comprise a typology of public financial institutions mobilising private finance in the transition to net zero emissions (chapter 2), an analysis of how green banks can create multiple types of value in the transition to net zero emissions (chapter 3), a case study of the CEFC and large-scale solar deployment in Australia (chapter 4), examinations of the viability of the green bank model in Indonesia (chapter 5) and Fiji (chapter 6), a conceptual investigation of a multilateral green bank in the Indo-Pacific and key conclusions (chapter 8).