The Role of Banks in Financing the Transition to Renewable Energy

Abstract

The transition to renewable energy has become one of the central challenges of the 21st century, driven by geopolitical instability, the finite nature of fossil fuel reserves, and the growing urgency of climate change. This article examines the role of banks in financing the energy transition, with a focus on the main green financial instruments, the European Union regulatory framework, and the specific context of the Republic of Moldova. The research is based on a review of relevant literature, regulatory documents, and quantitative data from the EU Platform on Sustainable Finance (2025), the Climate Bonds Initiative (2024), and the National Bank of Moldova. The results show that the global green bond market grew from approximately 37 billion USD in 2014 to over 587 billion USD in 2023, with Europe maintaining a dominant position. At the EU level, the total outstanding green financing reached EUR 1.69 trillion at end-2023. In Moldova, bank lending to the energy sector remains modest, representing 4.87% of total bank credit in 2025, despite a remarkable expansion of installed renewable energy capacity - from 61 MW in 2018 to over 1,023 MW in early 2026. The article concludes that banks are essential but underutilized actors in Moldova’s energy transition, and that scaling up green lending requires regulatory predictability, risk-sharing mechanisms, and alignment with EU sustainable finance standards. CZU: 336.71:620.97; JEL: G21, G28, Q42, Q48, F64