Trends, investor types and drivers of renewable energy FDI

As foreign direct investment (FDI) can help mitigate the repercussions of climate change, understanding what factors attract energy FDI is important. A large share of energy FDI originated from outside the energy sector, and given that renewable power FDI also comes from outside the energy sector, i...

Full description

Saved in:
Bibliographic Details
Published inIDEAS Working Paper Series from RePEc no. 2; pp. 0_1 - 21
Main Authors Knutsson, Polina, Flores, Perla Ibarlucea
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2022
Organisation for Economic Cooperation and Development (OECD)
Subjects
Accounting
Alternative energy sources
Capital expenditures
Clean technology
Climate change
Climate policy
Energy industry
Environmental policy
Foreign investment
Fossil fuels
Renewable resources
Trends
Canada
Netherlands
United Kingdom > UK
United States > US
China
Japan
Ukraine
France
Spain
Russia
Online AccessGet full text

Cover

More Information
Summary:As foreign direct investment (FDI) can help mitigate the repercussions of climate change, understanding what factors attract energy FDI is important. A large share of energy FDI originated from outside the energy sector, and given that renewable power FDI also comes from outside the energy sector, it is worthwhile to examine if drivers behind this type of FDI differ from what encourages investment by firms operating within the energy sector. This paper demonstrates that renewable energy FDI has been increasing, while FDI in fossil fuels is potentially slowing down. Results of the empirical analysis show that both the broader investment conditions and the strength of climate policies are vital for ensuring the favourable environment for renewable energy FDI, but the extent to which these factors impact investment decisions varies depending on where the investors come from: greenfield investors from outside the energy sector seem less responsive to the climate mitigation policies of host countries, whereas their location choices are tightly linked to the broader investment conditions in the destination economies.
ISSN:1815-1957
DOI:10.1787/4390289d-en