Islamic Finance and the Energy Sector

Abstract

This paper analyzes existing experiences with Islamic financing of energy projects. We argue that Islamic finance provides an additional channel to attract financial resources to improve energy efficiency, access to energy, and a sustainable energy supply. Major forms of Islamic finance methods used in the energy sector (including gas, petrochemical, and power projects) are reviewed based on real-world cases. A review of the limitations of Islamic finance in the energy sector and a set of policy recommendations are offered.

Keywords: Energy Finance, Energy Supply, Access to Energy, Islamic Project Finance, Middle East

JEL Classification: Q43, E22, Q16, G20