My work on Mobilizing Credit for Clean Energy: De-Risking and Public Loan Provision together with Paul Waidelich and Bjarne Steffen is now available as a CESifo Working Paper.

When governments try to mobilise capital for the energy transition, they often intervene directly in financial markets: by de-risking private loans or by providing loans themselves through state investment banks. Standard economic reasoning has long overlooked such financial policy interventions in favour of a clear-cut carbon price and R&D subsidies. In our paper, we develop a simple model to illustrate when such interventions may make sense and better understand when it is more effective for governments to subsidise loans provided by market participants and when to directly provide loans.