Journal Article

Encouraging clean energy investment in developing countries: what role for aid?

Date Published

Oct 1, 2014


Mark T. Buntaine, William Pizer


Climate Policy


Buntaine, M., & Pizer, W. (2014). Encouraging clean energy investment in developing countries: what role for aid? Climate Policy, 15(5), 543-564. doi:10.1080/14693062.2014.953903


A large portion of foreign assistance for climate change mitigation in developing countries is directed to clean energy facilities. To support international mitigation goals, however, donors must make investments that have effects beyond individual facilities. They must reduce barriers to private-sector investment by generating information for developers, improving relevant infrastructure, or changing policies. We examine whether donor agencies target financing for commercial-scale wind and solar facilities to countries where private investment in clean energy is limited and whether donor investments lead to more private investments. On average, we find no positive evidence for these patterns of targeting and impact. Coupled with model results that show feed-in tariffs increase private investment, we argue that donor agencies should reallocate resources to improve policies that promote private investment in developing countries, rather than finance individual clean energy facilities.

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Mark Buntaine

Mark Buntaine

Assistant Professor at the Bren School of Environmental Science & Management and the Department of Political Science at the University of California at Santa Barbara

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