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New paper alert: In @NatureEnergyJnl we show that over time ren. energy (RE) firms face decreasing costs of debt (CoD) relative to non-RE firms. With my fabulous colleagues @KarolKempa and @UlfMoslener.
A short thread
: (1/6)#energytwitter
To transform the energy system a lot of investment is needed. Debt is the major source of external funding to finance firm’s investment. But higher risks inherent to new low-carbon stuff vs. established but carbon-intensive sectors might lead to higher CoD for RE firms. (2/6)
We combine data on loans w. firm-level data from 26 countries. Pre-2007, the CoD of RE firms are (weakly significant) higher than those of non-RE firms. After 2007, CoD of RE firms are 73 bps (after 2011) or even 92 bps (2007-2011) lower than those of non-RE firms. (3/6)
We also have evidence that policies are important for this. A credible policy provides a positive signal for the RE sector reducing the risk perceived by lenders. We show that 1 std. dev. increase of the OECD env. policy stringency index reduces rel. CoD of RE firms by 19% (4/6)
This has important policy implications. Our results suggest that environmental policies have an important risk-reducing effect in addition to directly affecting firm profits (as we already control for them). (5/6)
Read the paper here: https://rdcu.be/cc2BG
Find it here: https://www.nature.com/articles/s41560-020-00745-x
Supplementary info is here: https://static-content.springer.com/esm/art%3A10.1038%2Fs41560-020-00745-x/MediaObjects/41560_2020_745_MOESM1_ESM.pdf
Read Karol's cool "Behind the paper" blog post: https://socialsciences.nature.com/posts/financing-costs-of-renewable-energy-and-fossil-fuel-firms-a-reversal-of-fortunes
End (6/6)
Find it here: https://www.nature.com/articles/s41560-020-00745-x
Supplementary info is here: https://static-content.springer.com/esm/art%3A10.1038%2Fs41560-020-00745-x/MediaObjects/41560_2020_745_MOESM1_ESM.pdf
Read Karol's cool "Behind the paper" blog post: https://socialsciences.nature.com/posts/financing-costs-of-renewable-energy-and-fossil-fuel-firms-a-reversal-of-fortunes
End (6/6)
Oh no: the correct handle of Karol is @kempa_karol
