Government role in creating demand for green investments

This chapter discusses some of the major factors that shape the demand for and supply of long-term bank financing for green investments and sets the scene for the analysis of environmental lending in the EU’s Eastern Partnership countries. The existence of a strong banking sector is an essential prerequisite for investing in lowcarbon projects. However, governments have a crucial role to play in putting in place an appropriate policy and regulatory framework that can create a green investment climate and encourage market participants to undertake and finance green investments.