Using the example of the Lebanese Ministry of Energy and Water’s (MEW) support for the residental solar water heating (SWH) market, this report highlights how sound governmental policies can boost a green economy. It evaluates the creation of a national financing mechanism for SWH, including the effects of government subsidies, interest free loans and sales activities in the residential SWH market in 2011. The study finds that installing solar water heaters saved a total of 18,390 tons of carbon dioxide resulting in a yearly saving of US$ 3,754,687. The success of the financing mechanism is attributed to close cooperation among the Central Bank of Lebanon, the MEW and the United Nations Development Programme (UNDP). Recommendations include: increase awareness raising efforts; build capacity for commercial banks that facilitate solar loans to avoid delays and to simplify applications; and provide risk guarantees for low and middle income households.