International Journal of Management and Economics Fundamental
42
https://theusajournals.com/index.php/ijmef
VOLUME
Vol.05 Issue02 2025
PAGE NO.
42-47
10.37547/ijmef/Volume05Issue02-10
Financing of entrepreneurial activity in the conditions of
a green economy
Roziyeva Maftuna
Tashkent State University of Economics, Tashkent City, Uzbekistan
Makhtimova Zarafshon
Tashkent State University of Economics, Tashkent City, Uzbekistan
Received:
24 December 2024;
Accepted:
26 January 2025;
Published:
28 February 2025
Abstract:
The transition to a green economy will require a radical change in business financing. Traditional
financing models often prioritize short-term profitability over environmental profitability, discourage green
business growth, and continue unstable practices. This article explores the challenges and opportunities
associated with financing entrepreneurship in a green economy, exploring the role of traditional and innovative
financial instruments, policy interventions, and the evolving benefits of investors in fostering sustainable
innovation and growth. We can say that joint efforts to adapt financial incentives to environmental goals are very
important in unlocking the potential of green entrepreneurship and achieving a truly stable future.
Keywords:
Green economy, entrepreneurship, green finance, sustainable investment, influential investment.
Introduction:
The urgency of addressing climate
change and environmental degradation has brought
the concept of "green economy" to the top of the
global debate. This economic model focuses on
sustainable development, resource efficiency and
environmental protection, requires a radical revision of
production, production and, most importantly,
financing. Entrepreneurship plays an important role in
the transition to a green economy by developing
innovative technologies, creating new markets and
promoting sustainable business practices. However,
access to sufficient and appropriate funding remains an
important barrier for green entrepreneurs.
Traditional financial institutions often refrain from
investing in green enterprises due to risks, a lack of
understanding of green technologies and the long-term
nature of environmental revenues. This article explores
the challenges and opportunities associated with
financing green entrepreneurship, highlights the need
to change investor thinking to unlock the full power of
innovative financial instruments, supportive policies
and green innovation and growth.
Literature review
In Uzbekistan, the socio-economic relations of the
business society are becoming embodied, pronounced,
rapidly developing and mobile. His role and role in the
formation and economic development of market
relations in the country is becoming more and more
noticeable. Joseph Schumpeter, the great economist of
the 20th century (1883 - 1950), said: "Without it, you
can feel the decisive role of entrepreneurship in the
socio - economic development of society."
The first scientific studies of entrepreneurship were
carried out by the great scientists of the 18th century
R. Cantilyan, A. Turgot, F. Kene, A. Smith, J.B. Say and
others. Consequently, the emergence of the concepts
of "entrepreneur" and "entrepreneurship" coincides
with this period. Later, such studies acquired a special
scientific focus, and the application of their results in
practice began to have an effective impact on the
economy. One of these results is the formation and
enrichment of the concept of "entrepreneurship."
As a result of the introduction into economic policy of
the principles put forward on the basis of the
development of the economy of the environment and
ecology, the concept of "green economy" began to take
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
shape. The term was first used for the UK government
in 1989 by leading economists in a report entitled
"Green Economy Plan" [1]. Unlike environmental
economics or ecological economics, the green
economy is more practical. "Green economy" does not
belong to the field of science, but mainly to real
economic policy, specific areas of activity (energy,
innovation, agriculture, etc.). This difference can be
observed in the fact that the "green economy" is
expressed not by the English economy (economic
theory or economic sciences such as environmental
economics, economic economics), but by the economy
(real economic activity).
The term "green finance" was first coined by renowned
economist Richard Sandor in 1992 at Columbia
University in New York is used in a special educational
program [2]. In 2002, Stanford published by Professor
Glethen Dale "The New "On the protection of natural
resources" financing issues considered [3].
METHODS
The methodology used in this study is associated with
a comprehensive analysis of the financing of
entrepreneurial activity in the conditions of the green
economy in Uzbekistan. A mixed method approach was
adopted to ensure a holistic understanding of the
subject. This methodology combines qualitative and
quantitative research methods using economic
indicators, statistics and comparative analysis to assess
the impact of the green economy and its impact on the
activities of business entities. The study is based on
primary and secondary data sources, including
government reports, Green Economy reports. The
study explores macroeconomic trends, legislative
frameworks,
and
infrastructure
developments
affecting green economy decisions. The main
component of this study is the comparative assessment
of green economy strategies in Uzbekistan with respect
to international criteria to determine the best results.
RESULTS AND DISCUSSION
Uzbekistan is already experiencing the deleterious
effects of a changed climate. The ecological disaster of
the drying Aral Sea
—
once the fourth-largest lake in the
world
—
epitomizes the pressing development
challenges in large parts of the country. Droughts,
extreme heat, rainfall volatility, and dust storms are
increasingly wreaking havoc on people and the
economy. Air pollution is a growing environmental and
health challenge. The annual costs of the damage to
health from ambient PM2.5 (PM2.5 = fine particulate
matter of 2.5 microns or less in width) pollution in
Uzbekistan, disproportionately borne by women,
children, and vulnerable groups, have reached 6.5
percent of gross domestic product (GDP). Climate risks
pose another source of vulnerability for the economy
in addition to the already high costs of degradation of
natural resources. Without action, climate change will
continue to have severe impacts on Uzbekistan.
Effective compliance with environmental regulations
will contribute to and encourage investors to adopt
greener business practices that provided by attracting
"green" investments. Norms in the field of energy
efficiency, such as energy saving targets for energy-
intensive industries or requirements for energy
efficiency of buildings, not always put into practice.
Uzbekistan needs to create a clearer strategic and an
institutional framework for green investment. Despite
the presence of several forums for dialogue and inter-
agency coordination, there are gaps between
ambitious goals and green growth, including in green
investment, and plans for further expansion of
polluting sectors such as petrochemicals and cement
production. The country is currently in early the stages
of integrating "green" considerations into promotion
policies and investment promotion.
Based on the above, the following were formed
strategic priorities to attract green investment, which
can be divided into two components.
I. Strategic priorities for investment in renewable
energy sources
II. Strategic priorities for environmental sustainability
of investment projects
Green investment structure
Analyzing the structure of green investments in the first
place investments in renewable energy should be
noted. Thanks to international tenders, green
investments (direct foreign investment in renewable
energy) in Uzbekistan have increased significantly over
the past 5 years and significantly exceed foreign direct
investment in fossil fuels.
Solar & Wind Power & Storage Tenders electricity
conducted between 2020 and July 2024 amounted to a
total of US $11.6 million, while at the power plant,
operating on natural gas, tenders were held for only 3.3
million USD (schedule-1). FDI in renewable energy
increased from $1.4 billion (9.1% of total and only one
seventh from fossil fuel investments) between 2014
and 2018 to US $11.7 billion between 2019 and 2023
(50.1% of total FDI in renewable energy sources), which
is almost three times more than FDI in fossil fuels.
This corresponds to or is higher than most of the
countries compared, and almost twice the Central
Asian average, but lower than leading countries such as
Jordan or Egypt. In addition to green investments in
renewable energy, Uzbekistan also received several
green investment projects for the production of solar
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
photovoltaic panels and solar heaters. For example, the
first automated plant for the production of solar
photovoltaic panels opened in 2024 in the city of Nukus
as a joint the Chinese-Uzbek enterprise.
Fig. 1 Investments in electricity generation and storage in 2020-2024
Implementation of the tasks defined in the Strategy for
the Development of the New Uzbekistan for 2022-
2026, increasing the effectiveness of the measures
being implemented to ensure "green" and inclusive
economic growth within the framework of the Strategy
for the Transition of the Republic of Uzbekistan to a
"Green" Economy, further expanding the use of
renewable energy sources and resource saving in all
sectors of the economy in order to:
•
reduction of greenhouse gas emissions per unit
of gross domestic product by 35 per cent of 2010 levels;
•
Increasing renewable energy generation
capacity by 15 GW and increasing its share by more
than 30 per cent of total electricity generation;
•
increase in energy efficiency in industry by at
least 20 percent;
•
30 per cent reduction in energy consumption
per unit of gross domestic product, including through
the expansion of renewable energy sources;
•
a significant increase in the efficiency of water
use in all sectors of the economy, the introduction of
water-saving irrigation technologies on an area of up
to 1 million hectares;
•
Expanding green space in cities by more than
30 percent by planting 200 million seedlings per year
and increasing the total number of seedlings by more
than 1 billion;
•
bringing the indicator of forest reserves of the
republic by more than 90 million cubic meters;
•
increase in the level of processing of generated
municipal solid waste by more than 65 percent.
In 2022-2026, it is planned to save fuel and
energy resources in the sectors of the economy, aimed
at reducing the energy intensity of the products of 25
enterprises and organizations by 20 percent by 2026
compared to 2022.
0
1000
2000
3000
4000
5000
6000
7000
2020
2021
2022
2023
2024
m
ln
.
d
o
llar
s
Investments in electricity generation and storage (mln in dollars USA)
solar energy, including storage
natural gas
wind energy, including storage
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
Fig. 2. Tasks in 6 priority areas of ensuring green economic growth in the Republic of
Uzbekistan
The achievement of the Paris Agreement goal of
limiting global temperature rise to 1.5-2°
С relative to
the pre-industrial period is directly linked to the rate of
decarbonization of key economic sectors, including
electric and thermal power, oil and gas and chemical
industries,
transport,
buildings.
Today,
using
Uzbekistan as an example, we will look at how green
finance helps achieve climate goals.
Within the framework of the Paris Agreement, the NDC
(nationally determined contribution) of the Republic of
Uzbekistan - the carbon intensity of the country's GDP
- must be reduced by 35% compared to the 2010 level
by 2030.
Electricity production from renewable energy sources
(RES), represented mainly by hydropower plants in
Uzbekistan, amounted to just over 10% of the total
electricity production in the country in 2020.
Nevertheless, in recent years Uzbekistan has already
been making a gradual transition to a low-carbon
economy. Uzbekistan has pledged to achieve carbon
neutrality in electricity generation by 2050. For this
purpose, it is planned to further develop solar, wind,
nuclear and small hydropower, as well as to modernize
the power grid. Natural gas will remain the main
hydrocarbon fuel during the transition period.
Opportunities
to
create
a
comprehensive
infrastructure for hydrogen energy are being
developed [4].
A number of innovative financing mechanisms are
emerging to address the challenges of innovative
financing mechanisms for green entrepreneurship:
In order to ensure "green" economic growth in the Republic of Uzbekistan, 6
priority areas have been identified
1. Sustainable and efficient use of natural resources
2. strengthening the resilience of the national economy to natural disasters and
climate change
3. ensuring green and low-carbon development of the national economy, in
particular industry
4. Innovate and attract effective green investments;
5. Developing sustainable and inclusive green urbanization
6. Support for the population and their places of residence, which may be
seriously affected during the transition to a green economy.
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
Fig. 3. Innovative financing mechanisms for green entrepreneurship
According to experts, the alternative ratio between
public and private investments involved in the project
of green projects should be in the ratio of 1:5. In
Chinese practice, 10-15% of the state budget and 85-
90% of private funds are used to finance domestic
coronavirus green projects [5]. Therefore, we consider
it expedient to minimize risks when attracting private
investment - to the level of risks faced when financing
specific projects. In practice, various economic
methods and levers of stimulating the attraction of
private investment - green projects are widely used in
the world.
CONCLUSION
Financing green entrepreneurship is very important for
the transition to a sustainable economy. Fixing the
problems
will
require
governments,
financial
institutions and investors to work together to adapt
financial incentives to environmental goals. By
adopting
innovative
financing
mechanisms,
implementing support policies and helping to change
investor perceptions, we can unlock all opportunities
for green entrepreneurship and create a more stable
and prosperous future. More research is needed to
explore the effectiveness of different funding models,
identify best practices, and develop a strategy to
expand green finance to meet the growing demand for
sustainable solutions.
Ultimately, the success of the green economy depends
on our ability to mobilize capital and channel it into
innovative businesses that will drive the transition to a
more stable world.
In addition to the above goals, it should be noted that
an increase in the number of electric vehicles and
public transport, such as electric buses, contributes to
the savings of natural gas by several million cubic
meters and prevents emissions of harmful gases into
the atmosphere. This, in turn, will lead to an
improvement in the energy supply of the population
and sectors of the economy. At the same time, in order
to protect the environment, it is advisable to improve
the quality of public administration, to pursue a policy
of public procurement of a green economy and, as a
result, to stimulate the use of green technologies in the
production of environmentally friendly products, and
to increase the energy potential of the national
economy. In addition, maximum funding for green
technology projects and increased public investment in
green infrastructure is needed.
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Blueprint for a Green Economy: David Pearce, Anil
Markandya and Edward B. Barbier. Earthscan, London,
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Richard L. Sandor. "Good Derivatives: A Story of
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Gretchen Daily , Katherine Ellison The New Economy of
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•Bonds issued to finance environmentally friendly projects
such as renewable energy and energy efficiency projects.
Green bonds
•Investments that focus on both financial income and positive
social and environmental impacts.
Impact Investing
•funds specifically designed to invest in early-stage green
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Venture capital funds focused on
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Crowdfunding
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Angel investors
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Green banks
•loans with interest rates that depend on the borrower's
performance on its environmental, social and governance
performance.
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
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