The Role of Green Finance in Driving Renewable Energy Projects : A Cost-Benefit Analysis

Shaheen, Fateha; Rashed Khan, Mohammad; Kawsar, Javed

Abstract

Renewable energy is a vital adaptation imperative in the fight against the effects of Climate Change and as a roadmap towards the attainment of Sustainable development goals. Nevertheless, the dominance of financial barriers when it comes to the implementation of large renewable energy projects, costs initial investments and risks related to them, often slows down the process. This is where green finance has been identified as a disruptive approach to providing unique green financial instruments like green bonds, loans and green equity to support sustainability projects. This paper aims at discussing the application of green finance in promoting renewable energy projects where the analysis of cost and benefits generally runs a cross-cutting factor by assessing the economic, social and environmental dimensions. This way, green finance is pointed out by the study as fitting the financial requirements by making capital accessible and making projects easier for investors. A structured cost effectiveness assessment model is applied in which various fundamental aspects including capital expenditure, recurrent charges and lasting overall profit/ROI are evaluated. The assessment also considers the environmental impact that relates to a massive negative impact on greenhouse gases and social impact, which include job creation and enhancement of public health. The analysis of these case studies shows that REL projects executed through green finance mechanisms generate significant economic value over time because of decreasing technology costs and policies. Moreover, environmental benefits including decrease in CO₂ emission and exploitation of natural resources give a solid ground to such projects sustainability. The socio-political benefits which are achieved with the help of green finance also include improved energy security as well as increased equitable access to energy. Conflicting regulations, market risks, lack of availability of green finance in the emerging markets remain as some of the issues even when having these advantages. The paper describes how they can be countered, and how this can be achieved through stability of regulation, privatization, and bettering of technology. This paper highlights the prospect of green finance in advancing renewable power, and offers policy implications for sponsors, investors, and stakeholders. Establishing green finance system friendly environment, the transition towards sustainable and low-carbon energy systems can be raced up in the world.

• Journal Article Type: Article
• Acceptance Date: Dec 17, 2024
• Online Publication Date: Dec 23, 2024
• Publication Date: 2024
• Deposit Date: Jan 21, 2025
• Publicly Available Date: Jan 22, 2025
• Journal: Emerging Economics and Management
• Electronic ISSN: 3023-333X
• Peer Reviewed: Peer Reviewed
• Issue: 02
• Pages: 1-11
• DOI: https://doi.org/10.5281/zenodo.14610518
• Keywords: Green Finance; Renewable Energy Projects; Cost-Benefit Analysis; Sustainable Development Goals (SDGs); Green Bonds; Carbon Emission Reduction; Public-Private Partnerships (PPPs)