Potential for Applying Islamic Green Sukuk in Financing Renewable Energy Projects: A Field Study on Libyan Islamic Banks

Abstract

This study analyzes the potential of using Islamic green sukuk as a financing mechanism to support renewable energy projects in Libya. It examines the conceptual framework of green sukuk and analyzes the current Libyan financial and legislative environment. The study employed a descriptive-analytical approach, utilizing a questionnaire distributed to a sample of employees in Libyan Islamic banks (n = 60). Data were analyzed using SPSS software. The results showed a high level of agreement on the importance of Islamic green sukuk as a mechanism for financing renewable energy projects (mean 3.62, relative weight 72.44%). However, the legislative and regulatory environment ranked last among the dimensions (mean 2.89), reflecting the weakness of the legal frameworks supporting the issuance of this instrument in Libya. Furthermore, multiple regression analysis revealed no statistically significant effect of the dimensions of Islamic green sukuk on the financing of renewable energy projects (F = 1.114, Sig = 0.359). The study recommends expediting the preparation of an integrated legislative and regulatory framework, enhancing the readiness of Libyan Islamic banks, and encouraging innovative financial products based on green sukuk.