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Lessons from 15 Years of Experience with the Dutch Tax Allowance for Energy Investments for Firms

Author

Listed:
  • Arjan Ruijs

    (PBL Netherlands Environmental Assessment Agency)

  • Herman R. J. Vollebergh

    (PBL Netherlands Environmental Assessment Agency)

Abstract

Since 1997, the Netherlands has had a tax allowance scheme that was introduced to promote investments in energy-saving technologies and sustainable energy production. This so-called Energy Investment Tax Allowance (EIA in Dutch) reduces up-front investment costs for firms investing in the newest energy-saving and sustainable energy technologies. The basic design of the EIA has remained the same over the past 15 years. Firms investing in technologies listed in the annually updated ‘Energy List’ may deduct some of the investment costs from their taxable profits in the year of the investment. Compared to investments in conventional reference technologies, the EIA decreases the payback period and reduces the need of financing the investments in energy-saving technologies. The EIA may also reduce search costs made by investors to find particular technologies, because entry on the Energy List equals eligibility for the subsidy. The Energy List contains generic technologies that meet a certain energy-saving standard or a selection of novel, but proven, technologies with a higher energy-saving potential than conventional technologies. Therefore, the list itself is also likely to have an attention value that may contribute to reduce information failures in the market for technology adoption. Over the past 15 years, the EIA has been affected by a number of changes, mainly due to exogenous factors, such as interactions with other policy instruments, rising oil and gas prices, and the economic crisis since 2007. Despite this turbulence and changes in government focus, the EIA remains part of the Dutch energy policy mix. Its flexibility allowed for adaptations where necessary and its role as a subsidy for technology adoption is likely to also have contributed to its legitimacy. Depuis 1997, les Pays-Bas ont en vigueur un mécanisme de déduction fiscale qui a été adopté pour encourager les investissements dans les technologies d’économie d’énergie et dans la production durable d’énergie. Appelé Energy Investment Tax Allowance (déduction fiscale au titre des investissements énergétiques, EIA en néerlandais), ce dispositif permet de réduire la mise de fonds initiale des entreprises qui investissent dans les technologies les plus récentes d’économie d’énergie ou de l’énergie durable. Le principe fondamental de l’EIA est resté le même pendant les 15 dernières années : les entreprises qui investissent dans les technologies inscrites dans la Liste des technologies de l’énergie – l’‘Energy List’ –, mise à jour tous les ans, peuvent déduire une partie de leurs coûts d’investissement de leurs bénéfices imposables de l’année où l’investissement est effectué. Grâce à l’EIA, les investissements dans les technologies d’économie d’énergie ont un temps de retour et des besoins de financement inférieurs à ceux des investissements dans des technologies conventionnelles de référence. L’EIA permet aussi aux investisseurs d’alléger les dépenses à engager pour trouver telle ou telle technologie, car l’inscription dans la Liste des technologies de l’énergie ouvre droit au subventionnement. Dans cette liste figurent des technologies génériques qui respectent une norme d’économie d’énergie donnée ainsi qu’une sélection de technologies nouvelles, mais éprouvées, dont le potentiel d’économie d’énergie est supérieur à celui des technologies conventionnelles. La liste proprement dite a donc une valeur informative dès lors qu’elle peut contribuer à combler des lacunes d’information sur le marché des technologies. Au cours des 15 dernières années, l’EIA a fait l’objet de plusieurs modifications, découlant surtout de facteurs exogènes tels que des interactions avec d’autres instruments d’action, la hausse des prix du pétrole et du gaz, ou la crise économique depuis 2007. Malgré cette instabilité et les changements de priorités des pouvoirs publics, l’EIA continue de faire partie de l’arsenal de mesures de politique énergétique des Pays-Bas. Sa souplesse a permis les adaptations nécessaires, et son rôle de subvention à l’adoption de technologies a sans doute aussi contribué à sa légitimité.

Suggested Citation

  • Arjan Ruijs & Herman R. J. Vollebergh, 2013. "Lessons from 15 Years of Experience with the Dutch Tax Allowance for Energy Investments for Firms," OECD Environment Working Papers 55, OECD Publishing.
    • Handle: RePEc:oec:envaaa:55-en
    DOI: 10.1787/5k47zw350q8v-en
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    Cited by:

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    2. Walid Oueslati & Vera Zipperer & Damien Rousselière & Alexandros Dimitropoulos, 2017. "Energy taxes, reforms and income inequality: An empirical cross-country analysis," International Economics, CEPII research center, issue 150, pages 80-95.
    3. Hassan, Mahmoud & Oueslati, Walid & Rousselière, Damien, 2020. "Environmental taxes, reforms and economic growth: an empirical analysis of panel data," Economic Systems, Elsevier, vol. 44(3).
    4. Paolo Bertoldi & Marina Economidou & Valentina Palermo & Benigna Boza‐Kiss & Valeria Todeschi, 2021. "How to finance energy renovation of residential buildings: Review of current and emerging financing instruments in the EU," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 10(1), January.
    5. Edwin van der Werf & Herman R. J. Vollebergh & Johanna Vogel, 2021. "Designing Instrument Packages for the Low-Carbon Transition: An Evaluation Framework with an Application to Austria," CESifo Working Paper Series 9192, CESifo.

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    More about this item

    Keywords

    avantage fiscal; environment; environnement; investissement; investment; policy evaluation; tax; tax preference; taxe; évaluation des politiques;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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