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University of Ljubljana
Faculty of Economics
DOCTORAL DISSERTATION PROPOSAL
Student: Renata Dombrovski
Supervisor: Jože Damijan, PhD, Full Professor
Ljubljana, September, 2011
1
DISSERTATION TOPIC: Efficient energy tax policies for promoting emergent
technologies
INTRODUCTION:
The pressure on global energy resources is high. Therefore, the current climate policy should
adopt the best measures that will limit harmful emissions, such as energy taxes, and other
policies where the direct aim is to promote renewable energy. Using time-series data from EU
countries for the period of 1990 to 2010 an extensive empirical cross-country analysis will be
conducted in order to propose the most efficient energy tax system. It is expected to find that
energy taxes in combination with tax incentives best promote implementation of solar
technologies. The purpose of this research is to empirically examine the effectiveness of
different tax instruments on implementation of solar energy technologies in EU countries.
The research focuses on the causal relationship between various energy taxes/supports,
investment costs and future savings in country / firm per year. This econometric study
explores the efficiency of all energy taxes and fiscal supports, such as lower tax rates, tax
relieves and exemptions for solar technology investments, applied within EU. Most countries
share the greenhouse gasses (GHG) emissions reduction goals. Although, their choice of tax
policies varies, depending mainly on the national priorities. Different fiscal instruments have
been used to promote clean energy. That includes difficulty in providing a renewable energy
EU policy framework, but helps in informing countries fiscal policy makers about the
efficiency of particular energy tax or incentive. Literature review gives a detailed overview of
existing empirical studies that examined the efficiency of a certain fiscal policy for promoting
emerging technologies in different countries. However, empirical model that comprises the
most efficient fiscal solutions for promoting solar technologies has not yet been proposed. A
probabilistic model will be developed in order to evaluate the solar energy implementation on
macro and micro level in EU, under energy taxes and different support mechanisms such as:
tax credits, tax incentives, governmental grants, feed in tariffs, renewable energy certificates,
carbon credits and emission trading schemes. The majority of data will be collected from
relevant statistical data sources: EEA, EUROSTAT, IMF, IBFD, OECD, the World Bank
and from official statistical databases of EU countries. Eurostat has developed a coherent
system of energy statistics. Annual data collection covers the EU-27 Member States and the
candidate countries of Croatia and Turkey. Time-series are available from 1990. The causal
relationship between energy tax/support, investment costs and future energy and money
savings in EU countries per year will be examined using time series data. Based on results of
empirical study new energy efficient tax model will be proposed. Appropriate energy tax
measures will enable countries to implement solar technologies and also to reduce greenhouse
gases emissions. Consequently, this will contribute to the policy-making process by helping
governments to implement optimal energy policies for promoting renewable technologies and
to reach their emissions target goals. The doctoral thesis will contain three interrelated
publishable papers. The main goal of first paper is to propose a new empirical model of
2
optimal tax policies for promoting renewable technologies on macro and micro level. Second
paper will empirically test proposed model on macro level and third paper will empirically
analyse the efficiency of energy taxes on micro level, based on time series data set from EU
countries.
KEYWORDS: greenhouse gasses emissions, energy taxes, solar technologies, economic
development
THE FOLLOWING RESEARCH QUESTIONS HAVE BEEN DETERMINED:
Q1: Why is of great importance that countries implement emerging solar technologies?
Q2: What is the impact of energy taxes / fiscal supports on promotion of solar technologies?
Q3: How different energy taxes and supports affect costs, energy savings and greenhouse
gasses emissions due to implementation of these technologies in the short and in the long run?
Q4: How efficient are various energy tax policies? What are the most efficient tax systems
and support policies that can be used to stimulate the application of solar technologies?
Q5: What is the role of the international cooperation on innovative solar technologies in
development of clean industries?
THEORETICAL FRAMEWORK:
An increasing importance has been given to energy clean sector. According to European
Environment Agency, energy accounts for 80% of all greenhouse gas (GHG) emission in the
EU. The present system of energy policies within the EU is not sustainable. Strand (2007)
emphasizes that a major issue in the current climate policy debate is to establish the balance
between policies that would limit the emission of greenhouse gases. Such policies are carbon
taxes or cap-and-trade schemes, and measures where the direct aim is to promote renewable
alternatives to GHG emissions-generating energies. It is very important that countries develop
and implement new environmentally friendly technologies and use cleaner energy by reducing
greenhouse gases emissions (Gerlagh, 2008, Zhai et. al., 2008, Peretto, 2009, Nixon et. al.,
2010). Environmentally friendly technologies’ implementation has been examined for years,
but new approaches towards its positive economic impacts are continuously researched.
One of the first serious scientific studies (Carson, 1962) pointed to dangerous environmental
problems, but it did not consider in-depth connection between economic growth and the
environment. Further analyses of environment, economic growth and development
(Bartelmus, 1994) represent significant scientific confirmation that the current system of
development is not sustainable. Goodstein (2010) examines options for sustainable
development of clean technologies in poor countries and the role of the government in
controlling greenhouse gases emissions. There is an extensive literature in the fields of
3
ecology, environmental protection, sustainable development, management (Stiglitz, 2000,
Muller, 2004, Böhringer et al., 2009, Jackson, 2010, Golusin et al., 2011), while studies that
can establish scientific based interaction between ecology, management and economy are
very rare. Črnjar and Črnjar (2009) successfully cope with that challenge and conclude that
ecological management must create cost-effective systems. Researchers are constantly trying
to find the optimal measures for creation of such systems. Dotson (2009) emphasizes the
importance of familiarizing the citizens’ with impacts of emerging energy sector on the
quality of their lives. Successful innovations have a certain goal - by influencing both the
economy and the society, they build social prosperity.
Main steps toward climate change fight are: The Vienna Convention for the Protection of the
Ozone Layer from 1985 (UNEP, 1985), The United Nations Framework Convention on
Climate Change, 1992 (UNFCCC, 1992), which recognized among other important issues
that all countries and especially developing countries need to achieve sustainable social and
economic development, changing their orientation towards application of new technologies
which will achieve greater energy efficiency for controlling GHG emissions. The next
important step is The Montreal Protocol on Substances That Deplete the Ozone Layer from
1987 (UNEP, 1987). Few years later, by signing The Kyoto Protocol (UNFCCC, 1997) -
adopted in 1997 and entered into force in 2005 - the contracting countries agreed to reduce
their collective greenhouse gas emissions by at least 5% from the 1990 level in the
commitment period from 2008 to 2012. The Kyoto Protocol introduced three market-based
mechanisms - Emissions Trading, The Clean Development Mechanism (CDM) and Joint
Implementation (JI) in order to help countries to meet their targets by reducing GHG
emissions in a cost-effective way. The 2007 United Nations Climate Change Conference held
in Bali (UNFCCC, 2007), The United Nations Climate Change Conference from 2009 held in
Copenhagen, Denmark (UNFCCC, 2009) and The United Nations Climate Change
Conference which took place in Cancun, Mexico, in 2010 (UNFCCC, 2009) delivered
important decisions toward cleaner environment future. All these conferences significantly
contribute to climate change fight, but countries still need to find the optimal financial and
taxation mechanisms for sustainable development of clean technologies and accompanying
industries. In March 2011 the European Commission (EC) adopted "A Roadmap for Moving
to a Competitive Low Carbon Economy in 2050" with the goal of keeping the climate change
below 2 degrees Celsius. Another target accepted is to obtain 80% to 95% GHG emissions
reductions by 2050 from a 1990 baseline. With the aim of reaching this target the EC
observed that, among other (EC, 2011):
- The European Union reduces its use of primary energy by 20 % by 2020;
- The European Union reaches a 20% share of its overall energy consumption in
renewable energy by 2020.
Reaching these goals will definitely require significant GHG emissions reductions. Following
this issues, this research focuses on the importance of energy taxes and fiscal supports for
implementation of solar technologies. Spread of eco policies through years indicate the
emerging need for facing the emission target challenges.
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Figure 1: International spread of environmental policies
Source: http://www.eea.europa.eu/data-and-maps/figures/international-spread-of-environmental-
policies/trend11-3g-soer2010-eps/TREND11-3G-environment-policies-spread.eps.75dpi.gif/at_download/image
The figure compares 23 environmental policy innovations between 1945 and 2005 across 43
OECD and Central Eastern European Countries. The colours represent adoption levels from
dark blue (less than 4 countries adopting the policy) to brown (more than 40 countries
adopting it). The policies are ranked by adoption rate between start year and 2005 (fastest
spreading policies first).
Significant differences among countries in using either eco taxes or other financial support
mechanisms (such as taxation of polluters and adverse technologies, lower tax rates, tax
relieves, exemptions and supports for eco-friendly technology investments) indicate that
existing energy tax system is not efficient. Cansino et al. (2010) provide an overview of the
tax incentives in the EU-27 member states to promote green electricity. A great diversity of
5
tax incentives used to promote green electricity demands energy efficient and harmonized
fiscal policy framework. The goal of energy tax harmonization is to accomplish more efficient
energy application between countries and thus to set up more competitive markets. Different
countries have reached different levels of development and emerging energy investments
which is the main reason why is very difficult to harmonize the environmentally tax system
between poor and powerful economies.
Existing literature mostly deals with energy prices (Neumann et al., 2006, Zachmann, 2008,
Ma et al., 2009). These research results support mainly energy price convergence. In
comparison with existing literature on energy prices, the literature on energy tax
harmonization or convergence is limited. Bilgili (2010) analyzes tax harmonization in EU
through convergence tests, employing minimum Lagrange multiplier unit root tests with
structural breaks. Observing the data for panels, he finds that panels for oil industry tax, diesel
industry tax, oil household tax and diesel household tax converge to average total taxes of EU
countries. Time series data for individual countries give mixed results, i.e. indicate both
convergence and non-convergence results. Further studies should also include data for other
eco taxes and examine their harmonization and convergence.
Literature has dealt with financial analysis of economic impacts of different energy policy
instruments within different countries – landfill tax (Morris and Read, 2001), white
certificates for energy efficiency improvement with energy taxes (Oikonomou et al., 2008),
electricity tax (Bjertnaes et. al., 2008), pro-ecological tax (Szargut and Stanek, 2008),
emission trading schemes (Pope and Owen, 2009), tax incentives (Markandya et al., 2009),
carbon tax (Lu et. al., 2010). Other innovative tax and financial measures for emerging
technologies development should also be found and implemented in order to obtain positive
environmental and economic goals in the future. Emerging clean energy technologies’
development demands efficient financial and tax systems within countries (Dinica, 2006,
Lipp, 2007, Siriwardena et al., 2007, Strand, 2007, Hart, 2008, Vollebergh, 2008, Delucchi
and Jacobson, 2011). Falconett and Nagasaka (2010) developed a probabilistic model to
assess the effects of certain support mechanisms on the financial return of small-scale
hydroelectric, wind energy and solar PV systems. They focused on three renewable energy
support mechanisms: governmental grants, feed in tariffs and renewable energy certificates.
The results of their study indicate that the feed in tariffs is the best mechanism to increase the
profitability of solar PV systems and wind energy projects. The green certificate mechanism
is the most suitable one to increase the profitability of hydroelectric projects. Finally, they
conclude that the efficiency of the support mechanisms varies depending on stage of
development of the renewable technologies that are implemented. Newbery (2005) has
searched for the answer whether the public finance sector can introduce efficient energy tax
system. The main factors for energy taxes were defined but inadequate to explain current
energy taxes.
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The literature mainly offers only theoretical link between renewable energy and economic
development. Carley et al. (2011) make an important approach towards energy based
economic development. The GDP structure of Republic of Croatia and other developing
countries (services sector, manufacturing industry and agriculture) requires new technologies
that will enable economic prosperity and competitive position in EU. It leads to the
assumption that the financial – taxation system should be more stimulating in comparison
with EU. That goal demands detailed econometric analyses of the existing energy measures
using national level data and proposal of innovative and efficient fiscal model.
The key findings in the field of energy taxation are summarized in Appendix1. That detailed
literature review study shows that energy taxes and growing scale of fiscal supports
differently affects the GHG emission reductions and emerging technologies implementation.
In some cases, one instrument is more efficient than the other, but there is no strict rule which
combination of mechanisms each country should apply in order to achieve the future energy
saving targets. Current problem is that the majority of studies compare the efficiency of only
two or three fiscal instruments. Therefore, this study examines the efficiency of all fiscal
measures applied within EU. In addition, it proposes a new theoretical model of optimal tax
mechanism for promoting solar technologies.
Based on literature review, it has been found that energy taxes and incentives are efficient
energy policies for stimulating implementation of solar technologies. However, what is
missing is the comprehensive empirical study that will test the efficiency of all fiscal
supporting instruments for promoting renewable technologies applied in EU countries. Based
on findings from the empirical analysis, the model of the most efficient measures that
countries should adopt in order to reduce GHG emissions in a cost-effective way should be
proposed. Costs of implementation of solar technologies have to be compared to benefits,
namely reductions of greenhouse gasses emissions, solar technological innovations and
increased future energy savings. This model will contribute to practice by helping
governments to implement optimal energy policies for promoting solar technologies and to
reduce harmful emissions. Detailed and comprehensive study will significantly contribute to
science in the field of energy taxation.
METHODOLOGY:
The structure of the dissertation will consist of the theoretical part that is followed by a
description of the empirical part. Methods such as analysis, synthesis, generalization,
specialization, description, compilation, classification will be used in generating a
comprehensive overview of the existing theory from the field of energy taxes and solar
technologies. Applying both qualitative and quantitative research methods, significant results
that will further bear implications in the policy-making are expected. In order to propose the
7
econometric model of optimal environmentally friendly taxes and fiscal supports detailed
review of existing empirical studies and econometric models has been done.
Using time-series data from EU countries for the period of 1990 to 2010 a probabilistic model
will be developed. The purpose of this model is to evaluate the solar energy implementation
on macro and micro level, after empirical examination of effectiveness of different EU energy
tax policy schemes. Data will be collected from relevant statistical data sources: EEA,
EUROSTAT, IMF, IBFD, OECD, the World Bank and from official statistical databases of
EU countries. EUROSTAT annual data collection covers EU-27 Member States and time-
series are available from 1990. The data collected will be analyzed in STATA using
multivariate analysis. Based on this cross-country empirical analysis new energy tax model
will be constructed.
EXPECTED FINDINGS:
The main research hypothesis indicates that energy tax policies promote emergent
technologies and reduce greenhouse gasses emissions. In order to test all hypotheses empirical
cross-country analysis will be conducted using time-series data from EU countries.
Additional hypotheses to be tested are as follows:
H01: Appropriate energy tax policy raises the price of non renewable energy.
H02: Increase in energy taxes leads to increase in innovative energy saving solutions.
H03: Clean energy solutions indicate the rising need for the emergent technologies
implementation.
H04: Energy taxes are more efficient than fiscal supporting mechanisms.
H05: Energy taxes complemented with tax incentives are more efficient that energy taxes
applied without combination with certain fiscal supporting mechanism.
H06: Energy taxes complemented with tax incentives are more efficient than combination of
energy taxes and emission trading schemes.
The main purpose of this research is to empirically examine the effectiveness of different tax
instruments and their causal relationship on implementation of solar energy technologies in
EU countries. One of the major results expected to emerge from this cross-country empirical
analysis is that energy taxes complemented with tax incentives are the best fiscal policy
measure for promoting solar technologies. It is also expected that optimal tax mechanisms
will make solar technologies implementation financially more efficient in comparison with
the usage of non renewable energy sources.
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DESCRIPTION OF THE RESEARCH PAPERS
The doctoral dissertation will consist of three interrelated publishable papers.
1st paper: Efficient energy tax measures for promoting solar technologies
The primary objective of the critical literature review is to provide fundamental understanding
of solar technologies and energy policies that would stimulate their implementation in order to
reduce greenhouse gasses emissions. Solar energy is one of the top renewable energy sources
with least harmful impacts on the atmosphere. The first paper will be based on the
comprehensive critical literature review in order to investigate which tax mechanisms are
used in environmentally developed EU countries. Paper will comprise classification and
description of energy taxes that different EU countries had already applied. It will also give an
overview of the economic impacts that these tax measures have caused. The main purpose of
the paper is to propose a new empirical model of optimal tax mechanism for promoting solar
technologies on macro and micro level. Dependent variables that model will contain are: the
price of renewable technology implementation, energy tax, tax incentive, emission trading
scheme, and independent variable is renewable energy implementation on macro / micro level
per year. If applied in certain EU country, another fiscal instrument will be added in the model
with the purpose of testing its efficiency in supporting the renewable energy implementation
on macro and micro level per year. Impact of these fiscal policy measures on GDP and GHG
emission reductions will also be examined.
Table 1: Variables to be empirically tested in order to construct the econometric model of
optimal fiscal policy measures for implementing solar technologies
DEPENDENT VARIABLE
INDEPENDENT VARIABLE
Variables that will be interchangeably used as
dependent variables in the model:
- Renewable energy implementation on
macro level per year
- Renewable energy implementation in
firms per year
Variables that will be additionally used as
dependent variables:
- GDP
- GHG emission reductions
Variables included in the model:
- TAXES:
- Energy tax (– electricity tax)
- FISCAL SUPPORT
MECHANISMS:
- Tax incentives
- Emission trading schemes
Variables (if applied in certain EU country)
that will be additionally included in the
model and examined:
9
- Tax credits
- Governmental grants
- Feed in tariffs
- Renewable energy certificates
- Carbon credits
- COMBINATION OF ENERGY
TAX AND PARTICULAR FISCAL
SUPPORT MECHANISM
Source: Author
2nd
paper: Efficient energy tax policies for stimulating the development of solar technologies
– macro analysis
Second paper will empirically test proposed model on macro level based on data set from EU
countries that applied different energy policies. Main hypothesis indicates that efficient
energy taxes and supports can help governments to accomplish environmental goals regarding
energy use and emissions. Empirical analysis of the effectiveness of various energy
mechanisms that are applied in EU countries will be undertaken in order to find the most
effective systems for promoting solar technologies development. Based on research of
Schmidt, S. N. et. al. (2010) we propose the first model:
where i denotes the country and t denotes time in years.
– The total number of solar technologies implemented in every country in one year
– The total number of solar technologies implemented in one country in one year
– Energy tax
– The price of renewable technology implementation
– Tax incentive
– Emission trading scheme
– Error term
In order to test whether the appropriate energy tax policy raises the price of non renewable
energy we propose the second model (based on research of Schmidt, S. N. et. al. (2010)):
where i denotes the country and t denotes time in years.
– The price of non renewable energy
– The price of non renewable energy in the previous year
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– Energy tax
– Error term
The empirical analysis will be of great importance for countries that are starting with the
application of energy tax measures and for countries which have not yet introduced necessary
measures in order to face the climate change fight. Results obtained will be of great use for
these countries in order to achieve energy savings, money savings and competitiveness.
3rd
paper: Optimal energy tax system for stimulating the implementation of solar
technologies – micro analysis
Third paper will empirically explore the efficiency of energy taxes on micro level. Increase
in energy prices lead to solar energy replacement efforts. The greater number of energy taxes
and incentives indicate the emerging need for finding the optimal combination of these
instruments that will best promote the implementation of renewable technologies in firms.
Therefore, the aim of this paper is to investigate the efficiency of various energy taxes and
supporting policies on implementation of solar technologies in companies. These
technologies use the sun's energy to provide electricity, hot water, heat and even cooling. The
empirical study will be based on micro level data set for companies from EU countries that
applied different fiscal policies. This paper will examine the causal relationship between
various energy taxes/supports and implementation of solar technologies in firms per year
using time series data. It is also very important to examine the impact of ownership structure
on renewable technologies implementation in firms. The empirical model that comprises the
most efficient tax measures for implementing solar technologies in firms will be proposed.
Based on research of Schmidt, S. N. et. al. (2010) we propose the model:
where i denotes the country and t denotes time in years.
– The total number of solar technologies implemented in all observed firms in one year
– The total number of solar technologies implemented in one firm in one year
– Energy tax
– The price of renewable technology implementation
– Tax incentive
– Emission trading scheme
– Ownership structure
– Error term
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The structure of the doctoral theses is proposed as follows:
General introduction
1st paper: Efficient energy tax measures for promoting solar technologies
1. Introduction
2. Theoretical Framework
3. Analyzes of the previous findings
4. The empirical model
5. Data set
6. Results
7. Discussion of Results, limitations and further research
8. Concluding remarks
2nd
paper: Efficient energy tax policies for stimulating the development of solar technologies
– macro analysis
1. Introduction
2. Theoretical Framework
3. Empirical Analysis
4. The empirical model on macro level
5. Data set
6. Results
7. Discussion of Results, limitations and further research
8. Concluding remarks
3rd
paper: Optimal energy tax system for stimulating the implementation of solar
technologies – micro analysis
1. Introduction
2. Theoretical Framework
3. Empirical Analysis
4. The econometric model on macro level
5. Data set
6. Results
7. Discussion of Results, limitations and further research
8. Concluding remarks
General conclusion
References
Appendix
12
DISCUSSION AND CONCLUSIONS:
The most important conclusion drawn is that energy taxes are driver of emerging
technologies. Complemented with fiscal policy supporting mechanisms they should be one of
the most efficient ways of spurring the eco friendly technologies application. Heterogeneity
study represents significant differences in efficiency of various types of energy taxes and
fiscal supports. Most of studies deal with the tax system within one country or compare
two/three different fiscal policy regimes. One of the most important current environmental
questions is: How to find the optimal combination between all energy taxes and incentives
applied in EU with the purpose of shortening the period of implementation of renewable
technologies on macro and micro level? In order to answer that questions and contribute to
practice by helping governments to introduce the most efficient combination of fiscal
measures the empirical model is proposed. It is expected from the analysis to confirm that
energy taxes complemented with the certain incentives create the best way to reduce
pollution, whilst being easy to implement. Comprehensive study on energy efficient fiscal
policies for promoting solar technologies will significantly contribute to science in the field of
energy taxation. The proposed empirical model that will comprise the most efficient tax
mechanisms that countries should accept in order to develop and implement renewable
technologies in a cost-effective way will contribute to their greenhouse gasses emission
reductions, money and energy savings and economic growth. In addition, this model will
contribute to the policy-making process by helping governments to adopt the best energy
policies for reaching their emission target goals.
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34. Zhai, X. Q., Wang, R. Z., Dai, Y. J., Wu, J. Y. & Ma, Q. (2008). Experience on
integration of solar thermal technologies with green bulidings, Renewable Energy, 33(8),
1904-1910.
15
Working papers:
1. Newbery, D. (2005). Why tax Energy? Towards a More Rational Energy Policy. Working
paper No. 72, Cambridge – MIT Institute, Cambridge.
2. Strand, J. (2007). Energy Efficiency and Renewable Energy Supply for the G-7 Countries,
with Emphasis on Germany. Working paper No. 299, IMF.
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2. United Nations Environment Programme - UNEP. (1987) The Montreal Protocol on
Substances That Deplete the Ozone Layer. Retrieved August, 2010, from
http://www.unep.org/ozone/pdfs/montreal-protocol2000.pdf
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http://unfccc.int/resource/docs/convkp/conveng.pdf
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United Nations Climate Change Conference in Copenhagen. Retrieved January, 2011,
from http://unfccc.int/meetings/cop_15/items/5257.php
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http://unfccc.int/2860.php
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economy in 2050'. COM (2011), Brussels, 08.03.2011.
2. European Commission. (2011). 'Renewable energy: progressing towards the 2020 target'.
COM (2011), Brussels, 31.01.2011.
3. Schmidt, S. N. et. al. (2010). 'Innovation of energy technologies: The role of taxes'.
Copenhagen Economics – Final Report.
16
Appendix 1: Fiscal instruments for promoting renewable energy implementation
Fiscal instrument
Efficiency of the
instrument – key
findings
Research Comments and
suggestions
Landfill tax & the
landfill tax credit
scheme
The Landfill Tax has the
potential to reduce
landfill disposal, to raise
funds for government
use and also to positively
contribute to the
promotion of sustainable
waste management.
Morris, J. R. & Read, A.
D. (2001)
Landfill taxes and tax
credit schemes can have
positive economic and
environmental effects in
countries where the main
method of disposing of
waste is to deposit it in
landfill.
Feed-in tariff (FIT) vs.
Renewable portfolio
standard (RPS)
The evidence from
observed
countries (Denmark,
Germany and UK)
suggests that, given
appropriate design
features, the
FIT is more cost effective
at getting renewable
energy developed.
Ekins, P. (2004)
The optimal model of
energy taxes and fiscal
supports has not emerged
and the scope for further
analysis is to evaluate
different experiences in
order to inform how this
goal may be
accomplished.
Electricity tax vs.
Increased VAT rate
A complete abolishment
of the electricity tax, and
replacing revenue by
increased value added tax
(VAT), would cause a
more equal distribution of
living standard and, at the
same time, avoid the
trade-off between
efficiency and
competitiveness.
Bjertnæs, G. H., Fæhn, T.
& Aasness, J. (2008)
Well thought decisions on
the level of tax rates and
incentives are crucial for
clean technologies
implementation. These
decisions should be result
of the comprehensive
study on fiscal policy
measure impacts on the
country budget and the
social status of the
citizens.
Pro-ecological tax
Pro-ecological tax should
replace the existing value-
added tax (VAT). The
income of the state after
introducing the new tax
should remain without
any change.
Szargut, J. & Stanek, W.
(2008)
Fiscal policy carriers
should be very careful if
applying these existing
findings. After the taxes
are introduced, frequent
changes should not be
done because even a
smallest correction could
cause negative economic
impacts. Before final
decision making process
additional research should
be conducted.
Tax incentives vs.
Energy taxes
Incentives to promote the
use of energy-efficient
Markandya, A., Ortiz, R.
A., Mudgal, S. & Tinetti,
Instead of working only
on comparison of taxes
17
appliances can be cost-
effective, but that
depends on the particular
country and the options
under consideration.
B. (2009) vs. subsidies, empirical
study that will examine
the efficiency of these
instruments if applied
together should be
conducted.
Governmental grants
(GG) vs. Feed in tariffs
(FIT) vs. Renewable
energy certificates
(RECs) vs. Carbon
credits (CC)
The green certificate
mechanism is the most
appropriate one for
raising the profitability of
hydroelectric projects.
Conversely, the FIT is the
best mechanism to
increase NPV of
photovoltaic systems and
wind energy projects.
The GG and CC are
secondary support
mechanisms compared to
FiT and RECs.
Falconett, I. & Nagasaka,
K. (2010)
It is important for fiscal
policy carriers to combine
support mechanisms with
energy taxes in order to
create the most efficient
future renewable energy
supporting scheme. Based
on the previous findings it
is clear that all supporting
policies have to achieve a
certain transformation
towards their more
efficient implementation.
Carbon tax
Carbon taxes are one of
the alternative fiscal
policy instruments that
are more likely to orient
social and economic
activity towards harmful
emission reductions.
Andrew, J., Kaidonis, M.
A., & Andrew, B. (2010)
A carbon tax
implementation does not
cause radical social
transformation of the
economy. In addition,
these taxes complemented
with the proper choice of
fiscal supports are the key
solution for emergent
technologies
implementation
improvement.
Source: Author
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