- Publicly-funded pilot demonstration projects, instrumental in proving technical and economic feasibility so that the private market could then develop; the role of the public sector as early adopter was also crucial.

- Certification/labeling of low energy buildings and trained professionals, to promote confidence of consumers, control costs, and promote the uptake of low-energy buildings.

- The CEPH (Certified European Passive House Designer) project, a pilot training course for certified house designers, already implemented in nine EU countries: architects, construction engineers and building designers received a ―train the trainers‖ course and certificate, in order to then help train all operators in the construction chain, from academia and R&D to builders, contractors, real estate agents, and homeowners.

- Several EU countries have already set up long-term strategies and targets for achieving low-energy

- standards for all new houses:

- in the Netherlands, there is a voluntary agreement with industry to have energy neutral buildings by 2020

- in the UK, the ambition is to have zero carbon homes by 2016

- in France all new buildings should be energy-positive (produce energy) by 2020

- in Germany, soft interest-free loans during the first years up to Euro 75,000 are available both for renovations and new constructions

- Source: EU (2009), Barta (2006).

Improving a country‘s **financial infrastructure** also can have significant effects on green growth by, among others, providing funding for adopting green infrastructure, and enabling farmers to adopt higherreturn technologies that both decrease crop losses and decrease vulnerability to the losses (Box 10). Barry et al. (2011) examine the adoption of efficient stoves, biogas plants and tobacco barns by commercial farmers in Malawi, Rwanda and Tanzania; financing was cited as the main stumbling block for all projects because of high start-up costs. Brunschweiler (2010) finds across a range of low-income countries that an increase in financial intermediation has a significant effect on non-hydro renewable energy generation per capita, because investment in renewable energy is constrained in environments where access to long-term loans is limited. And D‘Agostino et al. (2011) find that access to financial credit is an important barrier to solar home systems adoption in China.<sup>37</sup> Echoing this theme of the important supporting role of bank financing, Wolf (2011) explains how the largely bank-based, relationship-based financial systems played a key role in supporting the lower-risk technology absorption by firms during the reconstruction of continental Europe after World War II and in the subsequent years when income convergence was the main challenge.

**<u>Box 10. Micro-insurance for drought adaptation by subsistence farmers in Malawi</u>**

Improving financial insurance instruments by bundling index-based drought insurance with credit has enabled farmers to adopt higher-return technologies, contributing both to climate-change adaptation (reducing crop losses from more frequent drought-flood spells) and to decreasing vulnerability to climate-change impacts.

Malawi farmers face food security threats from their high exposure to weather risk, with about 80% of the population depending on rain-fed subsistence agriculture. A critical obstacle to adopting better technologies is poorly-functioning financial services markets – with banks unable to manage covariant drought and other risks that affect whole regions at the same time. Lack of affordable credit by smallholder farms has prevented access to more expensive, higher-yield seeds.

In contrast to traditional crop insurance, index-based insurance makes pre-specified payouts contingent not on the loss itself but on a physical trigger linked to the event causing the loss, such as rainfall measured at a local weather station. Advantages include: (i) lower administration costs for payouts and less scope for corruption (as 37 See Popp (2011) for an overview of these three different case studies linking access to finance to successful technology adoption.

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