Green Revenues for Green Energy

This executive summary examines Environmental Fiscal Reform (EFR) as a mechanism to fund renewable energy deployment in China. By analyzing eight international case studies, the report explores how environmental taxes and carbon trading can generate revenue for green energy while mitigating impacts on economic growth and competitiveness. It specifically discusses the role of earmarking revenues to increase transparency and investor confidence, while noting the political and economic challenges of implementing such measures within the Chinese context.

• Environmental Fiscal Reform (EFR) measures, such as environmental taxes, do not inherently hinder economic growth. When revenues are recycled effectively, the net economic impact can be positive, and modelling in Japan and several European countries suggests that GDP growth may be slightly higher than in business-as-usual scenarios.
• Earmarking tax revenues for specific goals like renewable energy increases transparency and public acceptability, though it conflicts with the 'non-affectation principle' which favors budgetary flexibility. As of 2006, the OECD reported that approximately one third of environmental taxes utilized some form of earmarking.
• Revenue stability for renewable energy funding can be maintained through adjustment mechanisms, price caps, or price floors. For example, Denmark's Public Services Obligation (PSO) reviews tariff rates every three months, while Australia's carbon pricing mechanism planned a price floor of US$14 and a price cap of US$19 for 2015–2018.
• Policy stability and cross-party consensus are critical for leveraging private finance in renewable energy, as projects often require several years to recover capital. In contrast, policies requiring periodic renewal without consensus, such as the ITC and PTC in the United States, create detrimental 'stop and go' cycles.
• China has implemented several EFR measures, including energy taxes on coal, crude oil, and natural gas ranging from 0.3 to 30 RMB/tonne, and tax reductions for renewable energy such as a 13 per cent VAT rate and a 15 per cent enterprise income tax rate. The country also established carbon trading pilot projects in seven cities and provinces: Beijing, Shanghai, Tianjin, Chongqing, Shenzhen, Guangdong, and Hubei.
• To fund its ambitious renewable energy targets, China is encouraged to transition from its current 'renewable energy electricity price add-on' toward a system relying on natural resource taxes and a carbon tax. The report suggests adding these revenues to the existing Renewable Energy Development Fund to avoid duplication.

APA

Cottrell, J., Bridle, R., Yongqiang, Z., Jingli, S., Xuxuan, X., Beaton, C., Leopold, A., Meyer, E., Sharma, S., & Cheng, H. (2013). Green Revenues for Green Energy. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/china_green_revenue_summary_en.pdf

Chicago

Cottrell, Jacqueline, Richard Bridle, Zhao Yongqiang, Shi Jingli, Xie Xuxuan, Christopher Beaton, Aaron Leopold, et al. Green Revenues for Green Energy. International Institute for Sustainable Development, 2013. https://www.iisd.org/system/files/publications/china_green_revenue_summary_en.pdf.

Wikipedia

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BibTeX

@techreport{cottrell2013green, author = {Cottrell, Jacqueline and Bridle, Richard and Yongqiang, Zhao and Jingli, Shi and Xuxuan, Xie and Beaton, Christopher and Leopold, Aaron and Meyer, Eike and Sharma, Shruti and Cheng, Han}, title = {{Green Revenues for Green Energy}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = oct, url = {https://www.iisd.org/system/files/publications/china_green_revenue_summary_en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }