Business and Society

How the financial crisis changed clean-tech investment preferences

May 9, 2012 | 1 min read

The Erasmus School of Economics researchers used the paper ‘Which renewable energy policy is a venture capitalist’s best friend? Empirical evidence from a survey of international cleantech investors1’, published in 2009 in the journal Energy Policy by authors M.J. Bürer and R. Wüstenhagen, as a benchmark forre-assessing the post-Financial Crisis preferences of investors.

The Crisis: A threat to feed-in tariffs?

Based on data collected in 2007 from 60 venture capital and private equity investors in renewable energy, Bürer and Wüstenhagen had discovered that such investors showed a clear preference for feed-in tariffs, thanks to the stability of the feed-in tariff policy. [According to Wikipedia: “A feed-in tariff is a policy mechanism designed to accelerate investment in renewable energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology.”]

“Until recently,” says Hofman and Huisman in their paper, “there seemed to be no threat to the success and the stability of feed-in tariffs. However the financial crisis has forced the governments of several countries which apply feed-in tariffs to cut these subsidies since the costs of these policies have become too large and government deficits have become too high…In January 2011, the Spanish parliament approved a law that retroactively cuts feed-in tariffs for solar photovoltaics by 30%,” they report.

Market-pull policies examined

While the original survey was in two parts — one about market-pull policies and one about technology-push policies — the Erasmus researchers chose to focus on the earlier questions about market-pull policies. “We believe the financial crisis might have affected primarily market-pull policies,” they say. Twelve market-pull policies, including feed-in tariffs, reduction of fossil fuels, CO2 emissions trading, renewable portfolio standards and Kyoto mechanisms were examined.

Only 32 of the original 60 private equity companies responded to the online survey provided by Hofman and Huisman. Therefore they indicate that “this survey can be characterized as a trend study and not a panel study.”

Less risk equals more popularity post-Crisis

Unsurprisingly, the 2011 survey indicated that the most popular post-crisis policy preferences for private equity investors were low-risk: Feed-in tariffs had the highest score, followed by technology performance standards. Green quotas, Kyoto mechanisms and CO2 emissions trading were less popular. “This might be explained by the fact that these policies imply more risk for investors since market prices for CO2 and green certificates fluctuate, and investors can be expected to be more risk averse in times of crisis,” they say.


1 Bürer, M. J., & Wüstenhagen, R. (2009). Which renewable energy policy is a venture capitalist's best friend? Empirical evidence from a survey of international cleantech investors. Energy Policy, 37(12), 4997-5006.

This article may be reproduced according to our terms of use with attribution (and link, if online) to To be cited as: “How the financial crisis changed clean-tech investment preferences”, Daan Hofman, Roland Huisman,, May 9, 2012.

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Research Paper


Ronald Huisman
Associate Professor, Erasmus School of Economics

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