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INTERNATIONAL JOURNAL OF ADVANCED RESEARCH IN COMMERCE, MANAGEMENT & SOCIAL SCIENCE (IJARCMSS) [ Vol. 9 | No. 3 (II) | July - September, 2026 ]

Can Green Bonds Lower the Cost of Financing Renewable Energy? An Integrative Review of Pricing, Signalling and Investor-Base Effects, with a Research Agenda for India

Dr. Geetanjali Shrivastava & Vishwa Ahuja

Renewable energy plants are capital-intensive, so the terms on which their developers borrow shape the price of the electricity they sell. Green bonds, whose proceeds are earmarked for environmental projects, are often presented as a way of making that capital cheaper. This paper asks whether the evidence supports that expectation. Through an integrative review of peer-reviewed and policy research on renewable energy finance and green bond markets, it organises the literature around three channels through which green bonds could affect financing costs: a direct pricing channel, in which investors accept lower yields on green debt; an investor-base channel, in which green issuance attracts long-term and environmentally motivated holders; and a signalling channel, in which credible green issuance conveys an issuer's environmental commitment. The review finds that the pricing advantage is small, of the order of a few basis points where it exists at all, and unevenly distributed in favour of large, highly rated issuers. The evidence on the other two channels is stronger: equity markets respond favourably to green bond announcements, particularly first issues and externally certified bonds, and issuers subsequently attract more long-term and institutional investors. Because the financing disadvantage faced by renewable energy in India arises mainly from the high cost and short tenor of debt, the review argues that the value of green bonds for India lies less in the yield discount than in widening and lengthening the pool of capital available to renewable energy. Five propositions and a research agenda are set out for Indian sovereign and corporate green bond markets.

Shrivastava, G. & Ahuja, V. (2026). Can Green Bonds Lower the Cost of Financing Renewable Energy? An Integrative Review of Pricing, Signalling and Investor-Base Effects, with a Research Agenda for India. International Journal of Advanced Research in Commerce, Management &Amp; Social Science, 09(03(II)), 229–234. https://doi.org/10.62823/IJARCMSS/9.3(II).9484
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https://doi.org/10.1016/j.jbankfin.2018.10.012.

DOI:

Article DOI: 10.62823/IJARCMSS/9.3(II).9484

DOI URL: https://doi.org/10.62823/IJARCMSS/9.3(II).9484

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