A green bond based circular economic framework to develop decentralized solar plants

Global warming is an escalating crisis mainly caused by CO 2 emissions and poses economic and environmental problems. Many countries have proposed supportive green policies to control global warming. This study proposes and evaluates a novel framework to outperform prior policies in economic and environmental efficiency. This framework employs circular economy concept and green bonds to set an optimal price for solar energy aiming at increasing economic and environmental benefit of solar plant investors, CO 2 emissions reduction and gross profit margin of industries through an objective function. It employs agent-based simulation, green bonds as transferable value among agents, Autoregressive Integrated Moving Average model, and PV-Sol software for data pre-processing. Iran serves as the case study in this research. The optimized fine price for solar energy is determined to be 0.0386 USD, with green bond prices adjusted by multipliers of 0.95 and 0.9, respectively. Furthermore, the total interest rate for investors, the gross profit margin reduction for industries, and the CO 2 emissions reduction percentage in Iran have been found 43.2 %, 10.2 %, and 12.5 %, respectively. These findings are attractive to investors due to outperforming bank benefits, avoiding negative cash flow for industries and remarkable CO 2 emissions reduction. The results suggest using circular economy and green bonds as an implication for green policies to develop private small-scale renewable energy plants with reduced inspection requirements through a closed loop which produces regenerative renewable energy cycle. This study contributes to the existing body of knowledge on supportive green policies by presenting a novel. • Green bonds and circular economy concept contribute to a novel green policy. • Designed green policy can reduce CO 2 emissions up to 12.5 % on national scale in Iran. • Designed green policy offers 43.2 % total interest rate on investment in solar energy in Iran. • Designed green policy poses 10.2 % reduction in gross profit margin of industries in Iran.