The Use of Green Tax Incentives for Renewable Energy Deployment in Emerging and Developing Countries

This report examines the use of green tax incentives in 35 emerging and developing economies to bridge a USD 2.2 trillion annual energy transition investment gap. It argues that while tools like tax rate reductions and customs duty exemptions can redirect capital, they are most effective when combined with broader policies and when shifting from profit-based to cost-based incentives to better support early-stage projects.

• Emerging and developing economies face an annual investment gap of USD 2.2 trillion to fund the energy transition. To address this, governments use green tax incentives such as import duty relief on clean technologies, accelerated depreciation, and income tax holidays to attract investment.
• The report identifies that emerging markets and developing economies (EMDEs) frequently rely on profit-based incentives, which are often ineffective for early-stage projects because companies are not yet profitable. Cost-based incentives are noted as a way to lower risk more directly and unlock investment.
• Green tax incentives are most effective when integrated with other policies, including local content requirements, national energy plans, power purchase agreements, and affordable financing provided by development or public banks.

APA

Mataba,, K. (2025). The Use of Green Tax Incentives for Renewable Energy Deployment in Emerging and Developing Countries. International Institute for Sustainable Development. https://www.iisd.org/publications/report/green-tax-incentives-renewable-energy

Chicago

Mataba,, Kudzai. The Use of Green Tax Incentives for Renewable Energy Deployment in Emerging and Developing Countries. International Institute for Sustainable Development, 2025. https://www.iisd.org/publications/report/green-tax-incentives-renewable-energy.

Wikipedia

{{cite report |last1=Mataba, |first1=Kudzai |title=The Use of Green Tax Incentives for Renewable Energy Deployment in Emerging and Developing Countries |publisher=International Institute for Sustainable Development |date=18 September 2025 |url=https://www.iisd.org/publications/report/green-tax-incentives-renewable-energy |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mataba2025use, author = {Mataba,, Kudzai}, title = {{The Use of Green Tax Incentives for Renewable Energy Deployment in Emerging and Developing Countries}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = sep, url = {https://www.iisd.org/publications/report/green-tax-incentives-renewable-energy}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }