Barriers to low-carbon innovation, consequences for finance and policy responses.

Abstract

This paper analyses the field of innovation studies regarding barriers to lowcarbon innovation and consequences for finance. It attempts to integrate previously separated literatures, bridge the gap between abstract failures and tangible barriers and add a temporal perspective to allow for more differentiated policy responses. Among the most salient problems for the commercialisation and diffusion of clean technologies, scholars have highlighted the financing environment. A complex set of barriers therefore revolves around the question of how to finance companies, projects and infrastructure based on low-carbon innovation. The paper contributes to a holistic understanding of the underlying mechanisms. A combination of technological barriers combined with economic barriers, institutional and political barriers contribute to thin financial market for lowcarbon innovation all along the innovation cycle. Policy makers can chose from a variety of measures address these barriers and mobilise private finance. Avenues for future research relating to financing low-carbon innovation and corresponding policies are depicted.