IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v151y2025ics0140988325007376.html

The impact of corporate taxes on (renewable) power generation capacity

Author

Listed:
  • Meyer, Niklas
  • Wulff, Thorben

Abstract

Using granular data on power-generating assets and rich variation in local business tax rates in Germany, we find that corporate taxes decrease the installed power generation gross capacity in a given municipality. A one standard deviation increase in local business tax rates is associated with a 3 % decrease in renewable power generation and an 11 % decrease in non-renewable power generation in the respective municipality vis-à-vis other municipalities in the same district without a tax increase. Non-taxable entities and state-owned enterprises do not show such investment response. In conservative political environments, this effect is more (less) pronounced for renewable (non-renewable) energy capacity. Our results suggest that increases in corporate tax rates may have unintended consequences for the green transition, hampering the absolute expansion of renewable energy. At the same time, our results suggest that corporate taxes decrease investment in non-renewable energy relatively more, highlighting the importance of examining differential investment effects of corporate taxes and their implications for tax policy in the energy transition.

Suggested Citation

  • Meyer, Niklas & Wulff, Thorben, 2025. "The impact of corporate taxes on (renewable) power generation capacity," Energy Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:eneeco:v:151:y:2025:i:c:s0140988325007376
    DOI: 10.1016/j.eneco.2025.108910
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988325007376
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2025.108910?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:151:y:2025:i:c:s0140988325007376. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.