Conference Agenda

Global climate finance has expanded rapidly, yet cross-border clean-technology investment remains limited and highly concentrated among advanced economies. This paper argues that scaling cross-border clean-technology investment requires not only financial de-risking strategies, but also credible coordination across national climate policies as a complementary pathway to mobilize capital at scale. Building on evidence that regulatory alignment facilitates international trade and capital flows, we conceptualize climate-policy alignment as a two-sided coordination problem in which bilateral investment depends on mutually consistent long-term decarbonization signals. Using a bilateral dataset covering over 500,000 clean-technology investment flows across 195 countries from 2017 to 2022, we examine carbon-tax alignment as an observable form of climate-policy coordination. Employing a staggered event-study design, we find that bilateral clean-tech investment increases by approximately 270% following mutual carbon-tax adoption, with no evidence of anticipatory effects. The gains from alignment are heterogeneous. Effects are larger for peripheral destinations and for country pairs without strong pre-existing ties, such as colonial relationships or a common language, suggesting that policy alignment can substitute for traditional channels of bilateral integration. Moreover, the presence of multilateral development banks (MDBs) significantly amplifies the investment response, indicating strong complementarity between policy de-risking and financial de-risking instruments.