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

Purpose One 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/approach We model energy efficiency for 37 members of OECD through a panel data framework and quarterly data over 2007Q1-2020Q4. Findings The 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 implications As 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/value To 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.

Automated summary

This paper examines the role of green bonds in enhancing energy efficiency financing and developing green energy resources, especially during challenging global times and the post-COVID period. The results show that issued green bonds and regulatory quality have positive impacts on energy efficiency, while inflation rate and urbanization can slow down progress in energy efficiency. Green bond policies should be accompanied by efficient regulation frameworks and energy-saving urban planning to drive up energy efficiency financing and environmental quality.