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Shari’ah-Compliant Finance: A Possible Novel Paradigm for Green Economy Investments in Italy

Domenico Campisi (), Simone Gitto and Donato Morea ()
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Domenico Campisi: Department of Industrial Engineering, University of Rome Tor Vergata, Via del Politecnico, 1, 00133 Rome, Italy
Donato Morea: Faculty of Economics, University of Rome Mercatorum, Piazza Mattei, 10, 00186 Rome, Italy

Sustainability, 2018, vol. 10, issue 11, 1-12

Abstract: In Italy, the dramatic reduction of government incentives has caused a decrease of investments in the renewable energy sector. For this reason, it is necessary to rethink funding techniques, extending the analysis to different cultural and financial models. In this paper, we study the incentive-dependency of an Italian case study in the wind energy sector in order to reach grid parity, comparing the obtained results with those of Islamic finance and conventional finance. In particular, we propose that Sukuk Islamic finance instruments be used for the realization of real assets in Shari’ah-compliant finance that prohibits interest rates, as in conventional financial markets, and we present the building cost thresholds necessary to achieve grid parity. Our results highlight the importance of incentives and the applicability of the use of Sukuk instruments for sustainable investments in the wind energy sector, which is crucial in the framework of current efforts against climate change as well as efforts to reduce greenhouse gas emissions.

Keywords: Islamic finance; wind energy; renewable energy; grid parity; CO 2 emission (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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