Helping policymakers mobilise and redirect private finance for the green transition – new toolbox
At ZOE Institute, we see the current geopolitical context as a crucial moment to rethink how public and private actors’ approach green finance. With the Clean Industrial Deal, the EU is laying out a business plan for energy-intensive industries and high-tech but low-carbon manufacturing. However, the challenge goes beyond just mobilizing capital. Other investment barriers like implementation bottlenecks, power imbalances, and short-termism must also be addressed.” – Jakob Hafele, Managing Director at the ZOE Institute
Since ZOE Institute was founded, we have worked on the economics of the green and just transition. How can we finance the transition we need to shape future-fit economies? So far, we have mainly looked at this through the lenses of economic resilience, public finance, and sustainable prosperity.
While there is enough public and private capital available in the financial system to finance the green transition, systemic barriers prevent it from flowing towards a sustainable economy. The challenge for policymakers is to unlock these financial flows. They need to create an enabling environment – one in which obstacles are removed and investment is mobilised and redirected to green investments. Designing such an environment is complex, but policymakers do have a wide range of tools at their disposal.
Our work on the Policy Toolbox focuses on identifying these tools and elaborating how they can help overcome key investment barriers. To do so, we build on extensive literature and have ongoing conversations with policymakers, think tank researchers and other experts across sectors. So far, two important insights emerged:
- Capital availability alone is not enough. Many companies and banks struggle to turn funding into viable business cases due to real-world obstacles, like, for example, a lack of skilled workers or infrastructure gaps.
- Deeper rooted barriers reinforce the status quo. Investment decisions are often shaped by decision-makers beliefs, which often favour short-term returns over long-term sustainability.
To change this, policymakers need a clear set of tools to reshape financial flows and drive systemic change. Our Policy Toolbox provides a structured approach to overcoming investment barriers at three levels. It includes over 150 policy tools. Users can apply filters to find relevant tools based on specific barriers and policy goals.
As a user, you can apply filters to refine your search:
- Investment barriers
- Policy area
- Policy status
- Affected entity
- Incentive structure
- Immediate fiscal effect
The toolbox then suggests policy tools with a description, specific characteristics, and an example of how it was implemented inside or outside of the EU.
You can explore the toolbox here: Policy Toolbox
