Building Competitive Green Industries

67 68 69TABLE C5. Legal and regulatory framework (continued)Name ofinstrumentDescription ofinstrumentEvaluation .(summary of strengths /weaknesses)CommitmentperiodExampleTaxation onpollutionor naturalresource useTaxes can be leviedon specific pollutionoutputs or on theabstraction orconsumption ofnatural resourcesincluding water userfees, wastewaterdischarge fees, andsolid waste disposalfeesBorn out of the “polluterpays principle,” that is, thata company causing pollutionor resource extraction shouldpay for the cost of removingor replacing it, or providecompensation to those whohave been affected. While suchtaxes can raise revenue streamsto finance clean technologyventures and businessdevelopment they do not, unlikemarket-based mechanism,ensure pollution reductions.Rather they simply penalizeunsustainable behaviors, whichmay not trigger investment inclean technologies.As with mostfiscal measures,its effectivenessdepends uponsustainedgovernmentcommitmentAmong developing countries,India introduced a carbontax in 2010, though only forcoal, charged at $1.07 perton either produced in orimported to India. 67 SouthAfrica, as another carbonintensedeveloping economy,has embraced the idea ofa carbon tax, though hasdelayed implementation until2016. 68Import taxreductions orwaiversKey fiscal measurethat can be targetedfor specific cleantechnology importsCan assist clean technologySMEs that depend upon theimporting of specific, oftenhigh-tech, inputs. Most relevantto Less Developed Countries. Amain challenge is to maintain anup-to-date list of technologiesand associated equipment(such as inverters used for PVsystems) that is fair and notopen to abuse by traders whowould avoid tax but use theequipment for other, that is,nonclean technology, sectors.As with mostfiscal measures,its effectivenessdepends on stableand long-termcommitment fromgovernmentSenegal‘s 2010 RenewableEnergy (RE) Law includes a0 percent corporate incometax (normally 30 percent) forinvestors in RE and 0 percentVAT (normally 7 percent) forRE products and services,which has been of particularbenefit to the solar PVmarket. 69Attractingtalent (“stickycities”)Government policyto attract and retaintalent and humancapital throughincome tax breaksAims to attract creative andscientific talent for cleantechnology, especially relevantfor less developed countriesthat have suffered a “braindrain.” However needs to beimplemented in concert withother enabling policies andalso to significant enough totrigger a flow of talent to besuccessful. Policy risk is higherin the countries that would standto benefit most and eligibilityrequires strict oversight so as toavoid gaming.Strong topdownpoliticalcommitment andstability is key toeffectivenessVarious African governmentscommitted to the ideaunder the New Partnershipfor Africa‘s Development(NEPAD), though it has mostlybeen implemented on anad-hoc basis with no formalmechanisms in place ormeans to measure impact, todate.67 Information on country carbon taxes is compiled by KPMG: www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/greentax/Documents/kpmg-green-tax-index-2013.pdf68 News report of the South African government’s 2014 decision to delay carbon taxation until 2016: www.bloomberg.com/news/2014-02-26/south-africa-delays-carbon-tax-plans-levies-on-acid-mine-water.html69 See Senegal’s ‘Renewables Readiness Assessment’ (2012) published by the International Renewable Energy Agency (IRENA) www.irena.org/DocumentDownloads/Publications/IRENA per cent20Senegal per cent20RRA.pdfAppendix C. Policy Options and Instruments105