Energy efficiency financing and the role of green bond: policies for post-Covid period

Abstract

PurposeOne of the major negative effects of the Coronavirus outbreak worldwide has been reduced investment in green energy projects and energy efficiency. The main purpose of this paper is to study the role of green bond proposed by the World Bank in 2008, as a reliable instrument to enhance the capital flow in energy efficiency financing and to develop green energy resources during and post the current challenging global time.Design/methodology/approachWe model energy efficiency for 37 members of OECD through a panel data framework and quarterly data over 2007Q1–2020Q4.FindingsThe major results reveal the positive impacts of issued green bonds and regulatory quality index on energy efficiency, while any increase in inflation rate and urbanization decelerates the progress of raising energy efficiency.Practical implicationsAs highlighted concluding remarks and policy implications, it can be expressed that the tool of green bond is a potential policy to drive-up energy efficiency financing and enhancing environmental quality during and post-COVID period. It is recommended to follow green bond policy with an efficient regulation framework and urbanization saving energy planning.Originality/valueTo the best of the authors' knowledge, although a few scholars have investigated the impacts of COVID-19 on green financing or examined the energy efficiency financing, the matter of modeling energy efficiency–green bond relationship has not been addressed by any academic study. The contributions of this paper to the existing literature are: (1) it is the first academic study to discover the relationship between energy efficiency and green bond in OECD countries, (2) since our empirical part provides estimation results based on quarterly data covering the year of 2019 and 2020, it may offer some new policy implications to enhance energy efficiency financing in and post-COVID period, (3) furthermore, we consider energy efficiency indicator (mix of industrial, residential, services and transport energy efficiency) as the dependent variable instead of using the simple energy intensity variable as a proxy for energy efficiency.

Asymmetric Green Bonds‐Energy Efficiency Nexus in European Union Countries: Evidence from Econometric Estimation

“…Based on our analysis, a negative association between GBs and ENI exists in the majority of the EU nations. This finding is consistent with prior empirical research such as the studies by Azhgaliyeva et al [12] and Tu and Rasoulinezhad, [26] who confirm the negative impact of GBs on ENI. Our results are partly consistent with those of Azhgaliyeva et al [12] for ASEAN nations, or with those by Zhang et al [23] for China, and Geddes et al [32] for Australia, UK, and Germany, all of which showed that GBs improve ENE.…”

“…The nonparametric quantile regression described below in its initial basic form was used, which was asserted by empirical studies of Azhgaliyeva et al [12] and Tu et al [26] ENI t = 𝛼 𝜃 (GBs t ) + 𝜇 𝜃 t (4) where ENI t and GBs t display energy intensity and green bonds, respectively, throughout time t. 𝜃 shows the 𝜃th quantile of GBs. These was no prior information of the GBs-ENI nexus, therefore the factor load 𝛼 𝜃 ((GBs t )) was not known.…”

“…The findings of fully modified ordinary least square approach found that GF improved the environmental quality in these nations. In another study, Tu and Rasoulinezhad [ 26 ] assessed the GBs‐ENE association in OECD economies for the period 2008Q1 to 2019Q4. By applying the new panel estimation technique continuously updated fully modified method, it was observed that GBs improved ENE.…”

The Determinants of Green Bond Issuance in the European Union

“…The inflation rate is a financial factor that influences the green market expansion, a higher level of inflation negatively affects the investor's decisions (Anh Tu et al 2020). In addition, analyzing the OECD members Tu and Rasoulinezhad (2021) find that inflation has a negative and significant impact on energy efficiency. Therefore, investors consider inflation when they decided to finance energy efficiency projects.…”

Is Bangladesh on the right path toward sustainable development? An empirical exploration of energy sources, economic growth, and CO2 discharges nexus

“…However, the consumption of NRE is a threat to environmental deterioration, being the major contributor to carbon dioxide (CO2) emission, and has become a global concern (Cevik et al, 2021;Tu and Rasoulinezhad, 2021). Hence, countries are increasingly focusing on renewable energy (RE) sources to tackle climate change, which is further triggered by the concern over the limited supply of NRE and the ambition to achieve sustainable development goals (SDGs) (Amri, 2017;Wang et al, 2022b).…”