Finance Policy for Renewable Energy and a Sustainable Environment  book cover
1st Edition

Finance Policy for Renewable Energy and a Sustainable Environment

ISBN 9781439894194
Published March 18, 2014 by CRC Press
258 Pages 4 B/W Illustrations

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Book Description

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.

Table of Contents

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)


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



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


Self-Funded Reserves

Second Loss Reserve

A Role for the International Development Banks

Tax Revenue Intercepts

Externally Funded Guaranties

Legal Guaranties

Financial Guaranty Insurance


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




Carrots and Sticks


Appendix: Countries with Non-Investment-Grade Ratings on Their Sovereign Debt

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Michael Curley is currently a visiting scholar at the Environmental Law Institute in Washington, DC. He founded the Environmental Finance Centers at the University of Maryland, Cleveland State University, and the Maxwell School at Syracuse University. He served as a senior lecturer at the Johns Hopkins University, and he was also an adjunct professor of banking and finance at New York University. He has also taught environmental law and finance at the Vermont Law School. In 1990, he was appointed to the Environmental Financial Advisory Board (EFAB) at the EPA, where he served for 21 years under four US Presidents.


"The book is written in a very clear way with many examples relating to everyday life experience that simplifies the explanation of financial products. The 23 principles offer a way to look at finance for environmental goods which is novel and innovative. It's important to note that only a small number are relevant solely to environmental finance - the vast majority relate to finance generally. Unfortunately governments do seem to have forgotten finance principles when they apply finance to the environmental sector (and quite often any sector!)."
––Dr Aled Jones, Director, Global Sustainability Institute, United Kingdom

"Mike Curley has provided us with a remarkably erudite, yet accessible, guide to financing the next great wave of environmental improvements. It is likely to become an indispensable source for generating new ideas to give us the biggest environmental bang for our buck."
––G. Tracy Mehan, III, Former Assistant Administrator for Water, US EPA

"Energy Policy cannot be made in a vacuum. Neither can environmental policy. Successful policies must consider cost and how those costs are financed. Mr. Curley’s book does just that: it shows us how to create the greatest benefits in terms of renewable energy and environmental improvements at the lowest possible cost to the people. For anyone interested in climate change and the environment, his book is a must-read."
––Bill Richardson - Former Governor of New Mexico

 "This is a definitive work in the strongest sense: it presents environmental finance as a critically important, if mostly unrecognized, function within environmental management. More importantly, Curley draws on his long experience as an innovative and influential practitioner to describe, for the first time in one place, the operating principles that define the field. His analyses of these principles manage to uncover previously unsuspected truths in some areas while slaying sacred cows in others. And, remarkably, he does all of this with an easy style that is frequently entertaining but always clear and effective."
––John J. Boland, The Johns Hopkins University, Baltimore, Maryland

"Michael Curley is a thoughtful and committed environmental financier whose instincts are sound and observations insightful. He understands how precious our environment is and how few our dollars. His [book] is an essential contribution to 21st century environmental policy."
—G. Tracy Mehan, III in THE ENVIRONMENTAL FORUM, September-October 2014