Financing a Sustainable Energy Transiton

24 Pages Posted: 27 Aug 2020

See all articles by Bradford Cornell

Bradford Cornell

Anderson Graduate School of Management, UCLA

Charles Cicchetti

USC

Date Written: August 9, 2020

Abstract

We begin by identifying the four major obstacles for financing the transition to a sustainable energy world: the immense size of the required financing, the need to coordinate investments in dozens of interrelated projects required for an orderly transition, the need to get the investment incentive right and to avoid crony capitalism, and the need to manage the political economics of electricity regulation and pricing. We then show that these obstacles cannot be overcome by sole reliance on either public or private finance. What is need is a creative combination of the two. In this regard, we suggest several possible policies. These include an expanded role of government guarantees of the private financing of sustainable energy projects, a focus on the funding of basic research, and an entire rethinking of the role of electricity pricing and regulation.

Keywords: Finance, Sustainable Energy

JEL Classification: G00, H00

Suggested Citation

Cornell, Bradford and Cicchetti, Charles, Financing a Sustainable Energy Transiton (August 9, 2020). Available at SSRN: https://ssrn.com/abstract=3676703 or http://dx.doi.org/10.2139/ssrn.3676703

Bradford Cornell (Contact Author)

Anderson Graduate School of Management, UCLA ( email )

Pasadena, CA 91125
United States
626 833-9978 (Phone)

Charles Cicchetti

USC ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

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