Abstract This paper analyses the performance of the Dutch “Green Funds Scheme”. This scheme is a policy instrument to advance green projects. The scheme relies on tax compensation for private investors who save or invest in green
institutions below market returns. The green institutions select and monitor certified green projects and pass through part of the lower funding costs to investors. Certification of the green projects is based on environmental value‐added and innovation. We provide a description of
the characteristics of this incentive scheme and investigate the scheme's performance.