Financing the Energy Transition in Algeria: A Comparative Analysis of Green Financing Mechanisms and the Role of Commercial Banks in Risk Management

Abstract

This article aims to analyse the financing mechanisms for the energy transition in Algeria, with a particular focus on the role of commercial banks in mobilising financial resources and managing the risks associated with green investments. It addresses the financing challenges facing energy-transition projects, particularly high initial investment costs, long capital-recovery periods, and the difficulty of assessing technical and environmental risks. To achieve these objectives, the study adopts a descriptive-analytical approach and a comparative approach to examine the characteristics of the main green-financing mechanisms, including green loans, green bonds, green sukuk, and public-private partnerships, and to analyse their suitability for financing energy projects and sharing their associated risks. The study concludes that strengthening the contribution of commercial banks to financing the energy transition requires the development of sustainable-finance instruments, the improvement of risk-guarantee mechanisms, the integration of environmental considerations into credit decision-making, and the adaptation of regulatory and supervisory frameworks to support the allocation of financial resources to green investments.