Regulatory and policy options to encourage energy efficiency - unido

MODULE 16: REGULATORY AND POLICY OPTIONS TO ENCOURAGE ENERGY EFFICIENCYpage 16.114. POLICY OPTIONS FOR INCREASINGENERGY EFFICIENCY INTARGETED SECTORS4.1. IndustryFiscal incentivesFiscal incentives are an effective means to stimulate companies to realize energyconservation projects in their organization.In China these fiscal policies included loan payment before tax, three-yearproduct tax and value-added tax exemption for new energy conservationproducts, import duty reduction and exemption for energy conservation technologyand equipment introduction. The state budget made special allocation foran energy conservation infrastructure construction fund and energy conservationtechnical renovation fund. These special funds enjoyed the preferential policy ofreduced interest loans and loan payment before taxation. See case study 3:China’s Energy Conservation Policy for more detail.In Japan the “Energy Conservation Assistance Law” sets out financial incentivesfor energy conservation in the form of tax exemptions, low-interest financing andindustrial improvement bonds to support approved voluntary efforts by businessoperators and building owners for energy conservation. See case study 1: Japan—Overview of Energy Efficiency Measures for further details.In Flanders part of the investment to improve energy efficiency in industrialprocesses is allowed to be deducted from the taxable income of the company(13.5 per cent).Energy efficiency targetsEnergy efficiency targets can be imposed on or agreed with the energy intensiveindustry.For instance in Flanders, the so called benchmarking covenant was agreedbetween the government and industry, with the aim of benchmarking the energyperformance of a given site with the best performing similar site in the world. Assuch, the companies committed themselves to work towards the best internationalstandard by 2012, taking into account that the best standard will improve