Nunn School Faculty Candidate Job Talk:  Mark Buntain, Assistant Professor, The College of William & Mary.

Multilateral and bilateral aid agencies have been tasked with promoting the adoption of clean energy technologies in developing countries as part of global efforts to stem climate change. To promote the level of investment required to meet climate mitigation goals, aid agencies must invest in ways that make private sector investments more likely in the future. In particular, they must invest in projects that are not yet well supported by the private sector, but where their efforts can reduce barriers to private sector investment in future periods. Using data on individual donor and private sector investments in developing countries, we examine whether donor agencies target their investments in countries that have limited private sector activity and whether early donor participation in clean energy finance leads to the faster development of robust private sector investment in clean energy. On both counts, the evidence to date is weak, if not negative. Coupled with additional evidence that domestic clean energy policies do influence patterns of private investment, these findings suggest that it may be more valuable for traditional donor agencies to support policy reforms that make private investment in clean energy more viable, rather than to provide project financing directly.