Hall, S orcid.org/0000-0002-1558-7081, Foxon, TJ and Bolton, R (2017) Investing in low carbon transitions: energy finance as an adaptive market. Climate Policy, 17 (3). pp. 280-298. ISSN 1469-3062
Abstract
The amount of capital required to transition energy systems to low-carbon futures is very large, yet analysis of energy systems change has been curiously quiet on the role of capital markets in financing energy transitions. This is surprising given the huge role finance and investment must play in facilitating transformative change. We argue this has been due to a lack of suitable theory to supplant neoclassical notions of capital markets and innovation finance. This research draws on the notion from Planetary economics: Energy, climate change and the three domains of sustainable development, by Grubb and colleagues, that planetary economics is defined by three ‘domains’, which describe behavioural, neoclassical, and evolutionary aspects of energy and climate policy analysis. We identify first- and second-domain theories of finance that are well established, but argue that third-domain approaches, relating to evolutionary systems change, have lacked a compatible theory of capital markets. Based on an analysis of electricity market reform and renewable energy finance in the UK, the ‘adaptive market hypothesis' is presented as a suitable framework with which to analyse energy systems finance. Armed with an understanding of financial markets as adaptive, scholars and policy makers can ask new questions about the role of capital markets in energy systems transitions.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2015 The Author(s). Published by Taylor & Francis. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. |
Keywords: | adaptive market hypothesis; efficient markets hypothesis; energy finance; investment; planetary economics |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Environment (Leeds) > School of Earth and Environment (Leeds) > Sustainability Research Institute (SRI) (Leeds) |
Funding Information: | Funder Grant number EPSRC RC-ME3889 |
Depositing User: | Symplectic Publications |
Date Deposited: | 04 Sep 2015 14:13 |
Last Modified: | 26 May 2017 15:00 |
Published Version: | http://dx.doi.org/10.1080/14693062.2015.1094731 |
Status: | Published |
Publisher: | Taylor & Francis |
Identification Number: | 10.1080/14693062.2015.1094731 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:89490 |