Handbook of Green Finance

726 Pages·2019·15.372 MB·English

by  Jeffrey D. Sachs, Wing Thye Woo, Naoyuki Yoshino, Farhad Taghizadeh-Hesary

Sustainable Development
Series Editors:
Parkash Chander · Euston Quah
Jeffrey D. Sachs · Wing Thye Woo
Naoyuki Yoshino
Farhad Taghizadeh-Hesary Editors
Handbook of
Green Finance
Energy Security and Sustainable
Development
Sustainable Development
SeriesEditors
ParkashChander
JindalSchoolofGovernmentandPolicy
NewDelhi,India
EustonQuah
NanyangTechnologicalUniversity
Singapore,Singapore
TheMRWSeriesonSustainableDevelopmentexploresandexaminesarangeofkey
sustainability questions, right from the abstract concepts, definition, criteria, and
approaches around the subject of Sustainable Development to the examination of
moreconcreteissuesfrompoliciesandpractices.Throughvariousvolumeslooking
attheglobalscenarioingeneralandAsiaPacificinparticular,theseriesintroduces
economic tools in sustainability, including cost-benefit analysis, environmental
impactassessment,economicappraisaltechniques,methodstodealwithuncertainty
andrisks,andothermethodstoevaluatetheimpactsofpolicyinstrumentsappliedby
governments to sustainability issues. Finally, theseriesadvocates best practices on
the part of produces, consumers, and governments, while charting the future for
sustainability.
Moreinformationaboutthisseriesathttp://www.springer.com/series/15042
(cid:129)
Jeffrey D. Sachs Wing Thye Woo
Naoyuki Yoshino
Farhad Taghizadeh-Hesary
Editors
Handbook of Green
Finance
Energy Security and Sustainable
Development
With143Figuresand133Tables
Editors
JeffreyD.Sachs WingThyeWoo
ColumbiaUniversity DepartmentofEconomics
NewYork,NY,USA UniversityofCaliforniaatDavis
Davis,CA,USA
NaoyukiYoshino FarhadTaghizadeh-Hesary
AsianDevelopmentBankInstitute(ADBI) FacultyofPoliticalScienceandEconomics
KeioUniversity WasedaUniversity
Tokyo,Japan Tokyo,Japan
ISBN978-981-13-0226-8 ISBN978-981-13-0227-5(eBook)
ISBN978-981-13-0228-2(printandelectronicbundle)
https://doi.org/10.1007/978-981-13-0227-5
©AsianDevelopmentBankInstitute2019
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Series Preface
The term “sustainable development” – first coined by former Norwegian Prime
Minister Harlem Brundtland in 1987 in the World Commission on Environment
andDevelopmentreport–hasbeenusedandmisusedovertheyearstojustifymany
actions or causes. Sustainability, in the context of that report, is defined as “devel-
opmentthatmeetstheneedsofthepresentwithoutcompromisingtheabilityofthe
futuretomeettheirown.”Thisconcept,whilenobleandcaringfortheenvironment
and that for the future generation, has however come to mean different things to
different people. To some, it implies a greater awareness of environmental issues,
whiletoothersitmeansacoordinated,organized,andsystematicevaluativetheory
foreconomicandpublicpolicy.Muchintellectualdebateonsustainabilityalsostems
from whether society allows for substitution between natural capital (green areas,
fossilfuels,andforests)andman-madecapital(buildingsandotherinfrastructure)in
thecourseofeconomicgrowthanddevelopment.Stillotherswouldbehappywith
efforts to measure sustainability by way of human progress, welfare, and income
growth. For much of environmental management, one clear focus is to achieve
environmentalqualitybyreducingman-madepollutiontoalevelthatisacceptable
tosociety.
Inall,sustainabilityisanebulousbutattractiveconceptwithanimportantguiding
principleand essentiallyasks thebasic questionfor anyactivity: “Can thisactivity
continue?”
There exists many works on sustainability, most of which are related to global
sustainability,aswellassustainabilityintheWesternworld.Incontrast,manyAsian
countries arestill prioritizing strong,yetpossiblyunsustainable, economicgrowth.
Majority of these developing Asian countries are economically far behind the
developed world. Some of these countries are experiencing pockets of abject pov-
erty, struggling to meet the needs of the present in areas such as sanitation and
education.Itisevidentthatstrongeconomicgrowthremainsparamounttoimprov-
ing living standards in many Asian regions, but we cannot overlook the fact that
growthcarriesitsowncoststothenaturalenvironmentandtopeoples’health.The
truesuccessofgrowththushingesonwhether“sustainabledevelopment”hasbeen
achievedandwhetherAsiancountriesareabletobalancethetwingoalsofeconomic
growthandenvironmentalprotection.
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vi SeriesPreface
TheMRWseriesonSustainableDevelopmentexploresandexaminesarangeof
sustainabilityquestionsasfollows,witheachbookdealingwithaparticulartopic.
1. Theoriginsanddefinitions/meaningsoftheterm“sustainabledevelopment”;the
relationship between sustainability and economic efficiency/growth; sustain-
ability theories and models; sustainability criteria including concepts of weak
and strong sustainability; other key conditions required to achieve sustainable
development;approachestomeasuringsustainability.
2. Therolesofvariouseconomicagentsinsustainabledevelopment.Whatcanand
whatshouldproducers,consumers,andgovernmentsdo?
3. How has sustainability policies and measures been implemented in developed
economies?WhatarethelessonsforAsia?
4. HowdoessustainabilityfeatureintheAsianenvironment?Howissustainability
perceived and understood by Asian countries? What has the region achieved
thusfar?Whatarethestrengthsorweaknesses/limitationsofcurrentlyadopted
policiesandapproaches?
5. Economictoolsinsustainability,includingcost-benefitanalysis,environmental
impactassessment,economicappraisaltechniques,methodstodealwithuncer-
taintyandrisks,andothermethodstoevaluatetheimpactsofpolicyinstruments
appliedbygovernmentstosustainabilityissues.
6. International policies and sustainability, including international institutions to
resolvesustainabilityrelatedissues,andthehistoryofinternationalnegotiations,
agreements,andactions.
7. Charting the future for sustainability: What lies ahead? What are the future
challenges,newsolutions,andtechnologicalinnovations?
8. Sustainabilityinmegacities.
9. Balancing environment and economic growth, including the complexity of
sustainabledevelopmentintheAsiancontext.
10. Climatechangeandinternationalagreementstotackleit.
11. TheproblemofSoutheastAsiahazeanditspossiblesolutions.
12. Economicinstrumentsandmechanismsforachievingsustainabilityandrelated
goals.
Audience Practitioners;governmentpolicymakers;industryspecialists;university
students,researchers,andfacultymemberstakingcoursesonenvironment,resource
management,ecology,economics,environmentalscience,urbanandresourceplan-
ning,etc.;NGOs;andothers.
JindalSchoolofGovernmentandPublic ParkashChander
Policy,NCR
Sonipat,Haryana,India
DepartmentofEconomics EustonQuah
NanyangTechnologicalUniversity
Singapore,Singapore
Preface
Given the current trajectory of global fossil fuel use, the projected increase in the
temperatureoftheplanetwillbecatastrophicforfoodproduction,humanhealth,and
biodiversity. Indeed, in many parts of the world it will threaten the survival of
communities. Governments have already agreed to keep global warming below
2 (cid:1)C but have yet to take decisive action toward creating a low-carbon energy
system.
Theworldneedsmassiveinvestmentsingreenenergysystems,andphasingout
ofcoal-firedpowerplants.Inaddition,itneedsconsiderableinvestmentsinelectric
vehiclestogetherwithasharpreductionininternalcombustionenginevehicles.
However, new investments in green energy projects and energy efficiency have
sloweddown.Theprivatesectorisnotshowingsufficientinterestingreenprojects
becauseoftheirhigherrisksandlowerratesofreturnwhencomparedwithfossilfuel
projects.
This means that achieving the Sustainable Development Goals (SDGs) will
require the establishment of new financial schemes for green projects. For “Green
Finance”tosucceed,governmentswillhavetointroducepoliciestoincreaseratesof
returnofgreenprojectsinordertoincentivizeprivateinvestorstoinvestinthem.
TheHandbookofGreenFinance:EnergySecurityandSustainableDevelopment
bringstogetherleadingscholars,policy-makers,andpractitionerstodiscussoptions
instrategiesandpolicyinstrumentsinapolicy-orientedapproachongreenfinance.
Thehandbookconsistsof12parts.
Part1isfortheintroduction,whichshowstheimportanceofGreenFinancefor
achieving sustainable development goals and energy security. Parts 2-11 are for
financial barriers for the development of green projects, green energy transition
(strategiesandfinancialgovernance),creditriskandcreditratingofgreenprojects,
green bonds, carbon capture and carbon pricing, role of banks and non-bank
financial institutions, fintech and financial innovation, green technology financing,
community-basedgreenfinance,andtheroleoffiscalpolicy.These10partsprovide
19 thematic works that show practical methods (financial and nonfinancial) for
promoting private sector investments in green projects. Part 12 contains country
case studies to identify the barriers and solutions to green finance. The countries
covered are Australia and New Zealand, Bangladesh, India, Indonesia, Malaysia,
Pakistan, the Republic of Korea, Singapore, and Viet Nam. The comparison of
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viii Preface
country experiences provides valuable lessons on how to utilize green finance to
acceleratethemovetoacarbon-freeworld.
This handbook is an essential source for researchers, government officials,
students,andprofessionalsworkinginthefinancialmarketandenergysector.
JeffreyD.Sachs
WingThyeWoo
NaoyukiYoshino
FarhadTaghizadeh-Hesary
Acknowledgments
WearegratefultoPeterJ.MorganandBihongHuangfortheirhelpinthisresearch
project from the ADBI side, Ainslie Smith for coordinating the copyediting of the
chapters, Muriel S. Ordoñez and Jera Lego for publication management, Grant
Stillmanforlegalaffairsmanagement,andMasaeIkedaforsecretarialsupport.We
also thank Juno Kawakami, Krithika Radhakrishnan, and TinaShelton of Springer
Naturefortheirhelpandeffortsinthebookpublishingprocess.
Wearegratefultoallcontributorstothisbook.Withouttheirvaluablecontribu-
tions,wewouldhavenotbeenabletofinalizethisbook.
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