26
has to be brought in from afar. Yet renewable energy projects are often
characterised as variable sources and have up to recently faced considerable
scepticism from financial institutions regarding their future revenue flows,
making it relatively expensive to secure investment capital (Kim and
Park 2016).
With the rapid decrease in costs of both wind and, especially, solar
energy technologies, these dynamics have begun to shift, and even large
fossil fuel majors are beginning to leverage their portfolios with some
investments in clean energy. But the challenges are significantly different
for relatively small entrants to the energy sector who do not have as much
financial weight. By contrast, shell companies have also begun to emerge
rapidly as vehicles for speculative financial investments in renewable energy
projects. How to maintain an energy sector that remains open to smaller
actors while also safeguarding against potentially risky short-term players
is a challenge that can only be resolved through a keen appreciation of
various practices of financial legitimation (Mazzucato and Semieniuk 2018).
Even tracking these observable practices, however, uncovers only the
tip of the proverbial iceberg. When it comes to energy finance, there is
little transparency, with large sums and many international organisations
involved, leveraging their presence across several different legal regimes
including global tax havens. There are thus intrinsic problems to contend
with to usher accountability into financial legitimation, and part of the
task is to better visualise these global metabolisms at lower scales like the
urban and national (Goodman and Marshall 2018). Many cities, regions
and countries have begun to track their territorial emissions and set targets
at lower scales, including sector specific ones. It is possible that such
attempts will be accompanied by fees on high carbon emitters and mass
mobilisation of greater investment in renewable energy. Many such initiatives have already been promoted in recent years, but these attempts at
alternative financial legitimation have faced stiff resistance in most parts of
the world, most notably from the powerful and well-funded fossil fuel
lobby that such practices, if successful, directly threaten.
Financial legitimation extends beyond project finance. These practices
are also embedded within other processes intrinsic to the everyday operation of the energy sector, such as wholesale and retail market trade. On the
wholesale market, fossil fuels such as gas secure high returns due to their
flexibility, being available ‘on demand’, whereas market designs do not
always favour renewable energy sources as their percentage of the total
supply mix increases rapidly (Ueckerdt et al. 2015). This again is a question
S. SAREEN
has to be brought in from afar. Yet renewable energy projects are often
characterised as variable sources and have up to recently faced considerable
scepticism from financial institutions regarding their future revenue flows,
making it relatively expensive to secure investment capital (Kim and
Park 2016).
With the rapid decrease in costs of both wind and, especially, solar
energy technologies, these dynamics have begun to shift, and even large
fossil fuel majors are beginning to leverage their portfolios with some
investments in clean energy. But the challenges are significantly different
for relatively small entrants to the energy sector who do not have as much
financial weight. By contrast, shell companies have also begun to emerge
rapidly as vehicles for speculative financial investments in renewable energy
projects. How to maintain an energy sector that remains open to smaller
actors while also safeguarding against potentially risky short-term players
is a challenge that can only be resolved through a keen appreciation of
various practices of financial legitimation (Mazzucato and Semieniuk 2018).
Even tracking these observable practices, however, uncovers only the
tip of the proverbial iceberg. When it comes to energy finance, there is
little transparency, with large sums and many international organisations
involved, leveraging their presence across several different legal regimes
including global tax havens. There are thus intrinsic problems to contend
with to usher accountability into financial legitimation, and part of the
task is to better visualise these global metabolisms at lower scales like the
urban and national (Goodman and Marshall 2018). Many cities, regions
and countries have begun to track their territorial emissions and set targets
at lower scales, including sector specific ones. It is possible that such
attempts will be accompanied by fees on high carbon emitters and mass
mobilisation of greater investment in renewable energy. Many such initiatives have already been promoted in recent years, but these attempts at
alternative financial legitimation have faced stiff resistance in most parts of
the world, most notably from the powerful and well-funded fossil fuel
lobby that such practices, if successful, directly threaten.
Financial legitimation extends beyond project finance. These practices
are also embedded within other processes intrinsic to the everyday operation of the energy sector, such as wholesale and retail market trade. On the
wholesale market, fossil fuels such as gas secure high returns due to their
flexibility, being available ‘on demand’, whereas market designs do not
always favour renewable energy sources as their percentage of the total
supply mix increases rapidly (Ueckerdt et al. 2015). This again is a question
S. SAREEN