Environmental finance is about creating the greatest environmental benefit for the largest number of people at the lowest possible cost. That is the first and most important principle listed in Finance Policy for Renewable Energy and a Sustainable Environment. Focusing on what the author considers to be the 23 principles of environmental finance, this text examines the key financial principles necessary to build strategies and adopt policies to deal effectively with environmental challenges. The text encourages making financial decisions based on science, not politics, and considers what it takes to design and execute environmental finance programs in the most cost-effective way possible.
Providing a historical overview of how we got to where we are now, and outlining the 23 principles needed to establish a stronger foundation for the future, this text presents the basic financial tools required to understand the concepts presented. It discusses the proper roles of grants, loans and guaranties, the concept and proper use of affordability, understanding leverage, and generating revenue streams for environmental programs. It also examines subsidies, financial risk reduction strategies, and the challenges posed by alternative energy as well as the next generation of environmental programs.
As it relates to how environmental projects and improvements are achieved, Finance Policy for Renewable Energy and a Sustainable Environment outlines the greatest benefits at the lowest possible cost to the public. This text is an ideal resource for upper-level undergraduate students in environmental engineering and business courses, as well as practicing environmental engineers.
Paying for the Fix
What Is Environmental Finance?
The Second Wave
The 23 Principles of Environmental Finance
The 23 Principles of Environmental Finance
The 2 Core Principles of Environmental Finance
Policy Principles of Environmental Finance
Management Principles of Environmental Finance
Revenue Raising Principles for Environmental Finance
Sources of Revenue for Environmental Finance Programs
Financial Principles of Environmental Finance
Financial Mechanics
Types of Debt
The Irregular Payment Method
Balloon Payment Loans
Level Payment Method
Level Principal Payment Method
Cash Available for Debt Service (CADS)
Coverage
Comparing Financing Alternatives
Comparing Loans
Hidden and Not-So-Hidden Cost Factors
Financing Costs
Impact of Term on Annual Debt Service Payment
Level Principal Payment Loans
Level Payment Method
Grants and Affordability
Grants
Affordability
The Role of Equity
The Curse of Subsidies
The Need for Subsidies
Delivering the Subsidy
Affordability Measures
Designing Better Subsidies
Subsidies: Some Real, Some Imagined
Leverage: The Power of Guaranties
Major Techniques for Financing Projects
Rules of the Game
Cost/Benefit Analyses
The Benefit Matrix
The Cost Matrix
Case Study: Republic of Georgia Water Project
Credit Enhancement
Tranching
Self-Funded Reserves
Second Loss Reserve
A Role for the International Development Banks
Tax Revenue Intercepts
Externally Funded Guaranties
Legal Guaranties
Financial Guaranty Insurance
Tariffs
Characteristics of Good Tariffs
Full Cost Recovery Tariffs
Tariff Design Options
Regulation of Water Tariffs
Climate Change and Renewable Energy
The Beginnings
Finance Policy for Climate Change and Renewable Energy
Cap-and-Trade Programs
Driving Down Costs
Reduce System Costs
Volumetric Tariffs
Raise Money/Change Behavior
Service Lives
Longest Terms
Lowest Rates
Credit Enhancement
Guaranties
Buy-Downs
Subsidies
Carrots and Sticks
Cost/Benefit
Appendix: Countries with Non-Investment-Grade Ratings on Their Sovereign Debt
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