Combining environmental taxation, spill-over effects and community-based financing in development of renewable energy projects in Asia

Naoyuki Yoshino, Farhad Taghi Zadeh Hesary

Research output: Contribution to journalArticle

Abstract

Asian economies are often characterized as having bank-dominated financial systems and underdeveloped capital markets, in particular with regard to venture capital. In economies that banks are the main source of funding, the main obstacle for financing infrastructural projects including renewable energy (RE) projects is lack of access to long-term finance. The second obstacle for development of RE energy projects is their lower rate of return comparing to fossil fuel projects as more subsidies are globally going to fossil fuels. For larger RE projects insurance and pensions are sustainable financing alternatives. Pension funds and insurance companies hold long-term savings, so these institutions could be a proper alternative for financing mega-size RE projects. In addition, utilizing the spillover effects originally created by energy supplies in form of tax revenues refund to RE projects will increase their rate of return and make them interesting for private investors. For smaller-size RE projects, the paper provides a theoretical model for combining utilisation of carbon tax and a new way of financing risky capital, i.e., Hometown Investment Trust Funds (HITs). The paper theoretically shows that by environmental taxation and allocating these tax revenues to HITs, RE projects will become more feasible and more interesting for private investors; hence the supply of investment money to these funds will increase.

Original languageEnglish
Pages (from-to)133-148
Number of pages16
JournalEconomics and Policy of Energy and the Environment
Volume2018
Issue number1
DOIs
Publication statusPublished - 2018 Jan 1

Fingerprint

Hazardous materials spills
Taxation
Insurance
Fossil fuels
energy
Finance
fossil fuel
Carbon
spillover effect
effect
taxation
Asia
financing
project
Renewable energy
Financing
Spillover effects
Community-based
Environmental taxation
pollution tax

Keywords

  • Carbon tax
  • Community-based fund
  • Environmental taxation
  • Green energy
  • Hometown investment trust funds
  • Renewable energy

ASJC Scopus subject areas

  • Renewable Energy, Sustainability and the Environment
  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

Cite this

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