Five factors in determining the level of green investment

According to an article in Finance & Development magazine by the International Monetary Fund (IMF), there are five macroeconomic variables that stand out in determining the level of green investment in a country. The study is based on data on renewables investment in 35 advanced and emerging economies during 2004–10. Almost all green investment in the world takes place in these 35 countries.
 
Some of the conclusions are:

• Higher levels of GDP tend to boost investment in green technologies. For example, an additional 1% GDP growth should raise green investment growth by about 4% in the long run, other factors being equal
• The cost of capital – proxied by the long-term real interest rate – has a negative impact on green investment. The estimated effect is quite large: green investment declines by about 10 percent when the real interest rate increases by 1 percentage point
• Oil prices have a positive and large impact on green investment
• Renewable portfolio standards and biofuel mandates do not seem to affect green investment
• Green investment can be powerfully influenced by public policies

(Source: IMF)

Read more:
http://www.imf.org/external/pubs/ft/fandd/2012/06/eyraud.htm