SUFI- Sustainable Climate Finance and its Impact

Start of Project 01/2019
End of Project 12/2022

The shift from negotiations on emission targets to negotiations on financial transfers in international climate policy reinforces the need for empirical evaluation of the impact of climate finance. The SUFI project analyzes the complete project cycle of selected climate finance projects. Using this evidence-based perspective, barriers are identified and recommendations regarding investment form and regulation are developed to design effective tools in the transformation process.

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Update on the project´s process

WP1: In a paper published in Nature Energy, we show that the borrowing costs of firms in renewable and non-renewable energy sectors diverge over time. We are able to show that more stringent environmental policies and a more developed financial market relatively lower the borrowing costs of renewable energy firms.

In addition, work has been completed on a theoretical model framework that examines the impact of climate policy instruments on investment decisions under uncertainty and calibrated to the European electricity market.

WP2: The analysis of a choice experiment with solar energy consumers in rural Pakistan revealed that respondents show stronger average preferences for more traditional product quality indicators over ecological ones. We can show that negative prior experiences with solar products lead to a pronounced decrease in preferences for such quality indicators. Insufficiently monitored development projects including the dissemination of solar products might hamper the development of self-sustaining markets.

Preliminary results of the project

The figure shows the adjusted predictions of the costs of debt of renewable energy firms (green circles) and non-renewable energy firms (brown triangles). It depicts the estimated costs of debt for different levels of environmental policy stringency. The costs of debt of non-renewable energy firms are almost constantly around 280–290 bps across the EPS Index percentiles, whereas those of renewable energy firms change notably. Our model controls for firm profitability separately. This indicates that stringent policies without direct and immediate effect on firm profits induce a decrease in the perceived risk by lenders and thus lower financing costs for renewable energy firms.


Kempa, K., Moslener, U., & Schenker, O. (2021). The cost of debt of renewable and non-renewable energy firms. Nature Energy, 6(2), 135-142.

Work in progress:

Nilgen, M., & Vollan, B. (2021). Investigating the effects of rural solar electrification projects on sustainability preferences.

Neupert-Zhuang, M., & Nilgen, M. (2021). Effects of sustainability information framing on retail investors: an online experiment. Preregistration link:

Neupert-Zhuang, M., & Schenker, O. (2021). Intentionally Holding Potential Stranded Assets in the Portfolio – Policy Uncertainty and Investments in the Power Market.