Closing the green finance gap – A systems perspective.

• Systematic literature review on green energy investments barriers. • Evaluation interviews with financial investors, advisers or experts. • Green investment barriers are found to be interrelated and to form a complex system. • A systems perspective as theoretical framework for successful long-term policy intervention is recommended. • A systems approach supports the exploitation of synergies, whilst avoiding adverse side effects. Meeting its climate policy objectives requires the UK to rapidly decarbonise its energy sector. This demands high levels of investments into low carbon energy infrastructure, which are currently not undertaken at required scale, leading to a green finance gap. We explore (1) key investment barriers, (2) a theoretical framework for investigation and (3) possible solutions, drawing on a review of academic literature and policy reports, and interviews conducted with financial investors and experts. Our study confirms that policy uncertainty and short-termism in the financial system are the two main investment barriers. Our results show that identified barriers form a complex system characterised by path-dependency, lock-in and non-linearity. We recommend the adoption of systems theory as an analytical framework to inform the related policy debate and propose the expansion or development of sustainable investment vehicles as a useful near-term solution while preparing a long-term policy intervention based on a systems perspective. [ABSTRACT FROM AUTHOR]