Financing energy transformation: The role of renewable energy equity indices

Michael Rezec, Bert Scholtens

Research output: Contribution to journalArticleAcademicpeer-review

12 Citations (Scopus)

Abstract

The support of financial markets for the transformation of the energy system to a low carbon society seems critical for its success. But will they support this transformation on the basis of market incentives alone? This study analyses how equity indices that try to capture renewable energy investments perform compared to conventional benchmark indices. Especially financial market investors – such as pension funds, insurance companies, and mutual funds – use these to assess and guide their renewable energy investments. As such, we take the perspective of financial market participants, which mainly only indirectly invest in renewable energy. We also analyze whether renewable energy indices are to be regarded as an example of market environmentalism. We find that the renewable energy indices’ risk-adjusted return is very poor and suggests renewables is not a financially attractive portfolio investment yet. We also argue that renewable energy equity indices can be regarded as an example of market environmentalism, especially with respect to commodification and frame-shifting.
Original languageEnglish
Pages (from-to)368-378
Number of pages11
JournalInternational Journal of Green Energy
Volume14
Issue number4
DOIs
Publication statusPublished - 2017

Keywords

  • Energy finance
  • Investments
  • Stock markets
  • Renewable energy
  • CORPORATE SOCIAL-RESPONSIBILITY
  • STOCK-PRICES
  • CONCEPTUAL-FRAMEWORK
  • CLEAN ENERGY
  • Oil prices
  • COMPANIES
  • MARKET
  • FIRMS

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