Mobilizing credit for clean energy: De-risking and public loan provision under learning spillovers
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Date
2025-09
Publication Type
Journal Article
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yes
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Abstract
This paper analyzes bank lending behavior toward novel clean energy technologies in the presence of high screening costs and potential learning-by-lending. In a two-period model, bank loans in the first period build up banks’ financing experience with the novel technology, which improves lending profitability and partially spills over to peers. Because of these learning externalities, such early-stage loans are either undersupplied by the market (a cooperation problem) or do not occur at all if the banking sector remains stuck in an inferior market equilibrium with no lending (a coordination problem). We propose a policy mix in which public loan provision eliminates the inferior equilibrium, thereby resolving the coordination problem, while de-risking subsidies internalize learning spillovers to peers. Our findings highlight the role of public financial policies if environmental and innovation externalities are already addressed, and we provide a numerical application to the early stage of offshore wind energy in Germany as a plausible context for our policy implications.
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published
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Journal / series
Volume
133
Pages / Article No.
103222
Publisher
Elsevier
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Edition / version
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Software
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Date collected
Date created
Subject
Climate policy; Credit guarantees; Government loans; Multiple equilibria; Renewable energy; State investment bank; Offshore wind; Social tipping point
Organisational unit
09742 - Steffen, Bjarne (ehemalig) / Steffen, Bjarne (former)
09550 - Schmidt, Tobias / Schmidt, Tobias
Notes
Funding
948220 - Effective green financial policies for the low-carbon transition (EC)