INNOVATIVE FINANCIAL MECHANISMS FOR FINANCING RENEWABLE ENERGY AND GREEN ECONOMY PROJECTS: AN ECONOMIC PERSPECTIVE

Аннотация

The transition toward a low-carbon economy requires unprecedented levels of capital reallocation from carbonintensive
sectors to renewable energy and environmentally sustainable industries. Traditional financial intermediation
mechanisms are insufficient to mobilize the scale and risk profile of investments required for climate mitigation and
green structural transformation. This paper provides an economic analysis of innovative financial instruments designed
to finance renewable energy and green economy projects, including green bonds, sustainability-linked lending, carbon
pricing mechanisms, ESG-driven capital allocation, and blended finance structures. The study evaluates their efficiency,
risk-sharing properties, and role in correcting market failures associated with environmental externalities. Particular
attention is given to developing economies, where institutional constraints and capital market imperfections limit green
investment flows. The findings suggest that financial innovation, when supported by regulatory frameworks and credible
climate policy, can significantly reduce the cost of capital for green investments and accelerate structural economic
transformation.