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

Author

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  • Domenico Campisi

    (Department of Industrial Engineering, University of Rome Tor Vergata, Via del Politecnico, 1, 00133 Rome, Italy)

  • Simone Gitto

    (Polytechnic Department of Engineering and Architecture, University of Udine, Via delle Scienze, 206, 33100 Udine, Italy)

  • Donato Morea

    (Faculty of Economics, University of Rome Mercatorum, Piazza Mattei, 10, 00186 Rome, Italy)

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.

Suggested Citation

  • Domenico Campisi & Simone Gitto & Donato Morea, 2018. "Shari’ah-Compliant Finance: A Possible Novel Paradigm for Green Economy Investments in Italy," Sustainability, MDPI, vol. 10(11), pages 1-12, October.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:11:p:3915-:d:178786
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