How Green Financing is Changing the Renewable Energy Market?

Growing interest in renewables is rapidly changing how energy projects are financed in America and around the world.

One of the biggest shifts has been an influx in outside money into the industry in the form of “green financing” — bonds, loans and other assets earmarked for renewable energy projects around the world.

The rise of the green financing market shows how investors are starting to take renewables more seriously — and it could signal a major transformation of the renewable energy market over the next few years.

Green Finance

Green Financing May Accelerate Renewable Energy Projects

Green financing is a catch-all term for investment in financial vehicles related to renewables and other green industries. Assets, bonds and funds related to renewable energy and other green investments make up the green financing market. In recent years, a robust green financing market has become widely viewed as essential to accelerating the development of new renewable energy technology projects.

Green finance is growing fast. In 2012, the sustainable debt market — including “green” and sustainable bonds and loans — was worth only around $10 billion, according to data from BloombergNEF. In 2018, just six years later, the market was worth nearly $250 billion.

Most of these gains came in the form of new green bonds (sometimes also called “climate bonds”), which are fixed-income investments designed to raise money for new renewable energy projects.

The growth of green financing represents a slow but noticeable divestment away from fossil fuels.

The pivot may also represent a change in how businesses are structured. The growing popularity of bonds as an investment vehicle may enable community co-ops rather than corporations to become a more viable business model for renewable energy providers. For example, the Westmill Solar Cooperative in the United Kingdom has raised more than £6 million ($7.94 million) through bonds offered to investors.

While coil, oil and natural gas are likely to remain a good investment in the short-term, the strength of the green financing market does seem like a signal that, over the next 10 to 20 years, non-renewables will become less and less tempting for investors compared to renewable and sustainable investments.

How Green Financing May Change Energy Around the World?

As the green finance market grows, regulators are beginning to codify what counts as a green investment.

In the EU, for example, regulators recently debated whether plastics manufactured from entirely recycled materials could count as a “sustainable” investment under European finance laws.

These new definitions and regulations may determine which industries receive major funding and which are left out of the green financing boom.

Nuclear energy, for example, is generally not regarded as renewable energy, but is sometimes considered sustainable. Nuclear power plants generate waste, but they also produce zero emissions, unlike fossil fuel-fired power plants.

Natural gas is also not considered renewable or sustainable, as it is a fossil fuel and produces significant carbon emissions when burned for power. However, some proponents of the energy source argue that it should be considered sustainable, as it produces significantly less carbon dioxide than similar fossil fuels.

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In 2019, EU regulators reached a deadlock over whether or not nuclear and natural gas power plants should count as sustainable investments. In a final compromise, EU lawmakers ruled that both nuclear and natural gas projects were neither included nor excluded in the definition of sustainable by default. Instead, projects would need to prove that they “do no harm” on a case-by-case basis.

Similar rulings and legal challenges could shape the future of energy as governments around the world grapple with the challenge of shifting away from fossil fuels.

A Coming Sustainable Energy Revolution

The rise of the green finance market may change what alternative energy looks like around the world. Legal debates over what should count as “renewable” or “sustainable” may affect which projects receive funding, while bonds and loans may make community cooperatives that provide renewable energy more practical.

As fossil fuels become less attractive to investors and the renewable energy market grows, green financing is likely to have major impacts on the future of renewables.

10 Green Business Ideas for Young Entrepreneurs

Out of some of the hottest trends that have been on the top lists for quite a while are choosing an entrepreneur as the primary occupation and doing an eco-friendly business. While the former is primarily motivated by making money to afford quite a comfy living, the latter is usually motivated by something else. And that something else does not mean it has to be charitable.

The eco-friendly business has lots of benefits, the scales of which largely outweigh the monetary advantages of doing any kind of other business. Just think about it, by going green with your business you’re promoting the Earth’s safety from potential environmental catastrophe, you support innovation, and simply look cool and trendy. So, what are the specifics of doing business in a green way?

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Green Business: The Essentials

Although it might seem like something totally out of this world, green business is still business. You still have to be aware of all the formalities, such as legal regulations, competition, and economic rules and environments. You must make sure that people know about you, so marketing through all channels is reasonable.

Yet, there are some specific characteristics of the eco-friendly business in particular. In fact, such specifics are large in numbers, yet, their main ideas lie in creating and maintaining an image of the sustainable business that cares about its surrounding in all possible meanings. That applies not only to Mother Earth but also to your employees (who should be treated well anyway), your customers, and your business partners.

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As for how you can do that, here are the 10 hottest green business ideas for green entrepreneurs today.

  1. Start with yourself. If you want to run an eco-friendly business that pursuits a corresponding role, you want to make such business green to the bone. Try to reduce or eliminate the use of harmful materials in as many processes as possible. Recycle the office supplies that got used up. Avoid transportation using fossil fuel vehicles. This way you’ll show that what you do is not only for money or prestige, it’s for the sake of itself, which is quite attractive for consumers.
  2. Save energy and water. While neither electricity nor water harms the environment, by saving them, you also save the environment. The thing is that electricity production might harm the environment while saving water basically saves water, the resource that becomes quite scarce even in the developed countries of the world.
  3. Address green consulting. Yes, there is such a thing as green consulting and it might be very useful especially in the beginning. Essentially, by addressing a sustainability consultant, you retrieve invaluable information for your green business that you will be able to use and reuse at your disposal. So, don’t neglect a great piece of advice, even if you have to pay for it.
  4. Topical publications. It’s also nice to show that you know what you’re doing. By creating a blog outlining the current environmental trends, you can achieve exactly that. While some of the elements of your business will surely demonstrate your eco-friendliness anyway, sharing your experience and knowledge with people also looks pretty cool.
  5. Support relevant local events and businesses. It’s always nice to have a community that follows similar ideas to yours. Sponsor the bicycle races or supply the local concerts with what you have to offer, and people will see you even if you make minimum to none marketing efforts.
  6. Partner with similar businesses. By directly cooperating with other businesses supporting sustainability will reduce the harm you might potentially do to the environment to the minimum. While you might use sustainable technology yourself, your suppliers, for instance, might not. Partnering exclusively with eco-friendly businesses will surely fix that.
  7. Even more topical publication. You might not get popular with all this eco thing in your country. But you can still expand abroad, at least, on the internet. You can significantly enhance your online presence and SEO by translating your blog content. Just check out Pickwriters and find a suitable professional for your business. There’s a lot of services like that online and many of them don’t charge a fortune.
  8. Promote reuse and recycling. Whether you produce certain green products, sell them, or provide eco-friendly services, there’s always a place for reuse. Recycle the container material, encourage your customers to bring those paper bags back for a reward, or reuse all your tools whenever possible.
  9. Get involved in green financing. This is suitable for the later stages of your business development. While there were some ways, in which you can support the local sustainability movements, you can also help with money directly whenever you can. Give donations that develop and support sustainability, sponsor the cleaning of public spaces, etc. there are many ways to help our environment and money is not an exception.
  10. Don’t stop in one kind of business. You can do good in many ways. If you sell organic food, deliver it, and help other businesses to do the same. If you repair bicycles, gather the old ones and refurbish them. If you produce organic beauty products, then sell them or provide beauty services for people.

Doing the Right Thing

Doing an eco-friendly business is certainly the right thing. There are lots of ways you can make our world a little bit cleaner and safer to live in and many of those ways can co-exist in one business. It’s important to remember that whenever you do a good thing, there’s no point in doing just one good thing. Diversifying your sustainable business will only multiply the great things you do in the first place.