Role of Fiscal Instruments in Promoting Low-carbon Technology Innovation

Working Papers from National Institute of Public Finance and Policy

Abstract: Many of the most promising low-carbon technologies currently have higher costs than the fossil-fuel based technologies. It is only through incremental learning from research, development and deployment that these costs can be reduced. Government intervention in the innovation process through fiscal policy instruments can be useful to accelerate this process, and catalyse early adoption. This paper reviews the best practices associated with the choice and design of such instruments and identifies the main lessons learned of their implementation in the case of renewable energy. The paper outlines an analytical framework which identifies the characteristics of drivers and barriers in innovation of RETs; sequencing of various steps involved in promoting innovation; and various policy tools in the context of each barrier that will help accelerate the process and enhance the outcomes. The paper notes that the issue of design and implementation of fiscal policy measures for RE technologies is complex and requires a nuanced, case by case approach, however, some useful broad conclusions can be drawn on the lessons learnt from these programs for future policy design and implementation.

Keywords: Fiscal instruments; Low-carbon technology continuum; Renewable energy policy framework; Price and quantity based instruments; Market failures and barriers in RE (search for similar items in EconPapers)
Pages: 60
Date: 2015-05
New Economics Papers: this item is included in nep-ene, nep-env and nep-ppm
Note: Working Paper 147, 2015
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Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:15/147

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