In a world of mobile capital and profits, many developing countries use tax incentives in the hope of attracting domestic and foreign investment. Their effectiveness, however, has often been disputed, not least in relation to the mining sector, which involves location-specific resources that cannot be moved. 

This practice note looks at tax incentives in the mining sector. For many developing countries, receipts from mining are often a major source of revenue. The central task for policy-makers, therefore, is to design fiscal regimes for the mining industry that raise sufficient revenue, while providing adequate inducement to invest. Many times, governments have given tax incentives to mining investors that have turned out to be overly generous, forgoing significant tax revenues and sometimes resulting in conflict with investors. Preventing similar occurrences from happening again demands sector-specific guidance on the design and use of tax incentives.

This practice note focuses on the types of behavioural responses of taxpayers and unintended consequences that might flow from providing tax incentives. For example, if a mine is given a time-limited tax holiday, one response might be to speed up the rate of production to increase its tax-free revenue during the period. When the holiday expires, there is less ore left to extract than if the mine had maintained a normal rate of production, further reducing government revenue. The goal of this practice note is that governments of resource-rich countries are better equipped to identify and cost potential behavioural responses by mining investors to tax incentives.

Kasese, a region in southwestern Uganda, is grappling with increased flood, landslide, and heat risks due to climate change and deforestation. Despite around 50% tree cover throughout the district, rapid population growth, unregulated timber harvesting, and a reliance on wood for fuel have put the ecosystem under pressure, leading to rapid forest loss.

Alongside this, extreme rainfall events, exacerbated by climate change, have caused devastating floods, soil erosion, and land degradation. In 2020, over 10,000 people in Kasese district were displaced by flooding, with properties and infrastructure severely damaged.

To combat this, the municipality and district of Kasese have devised a comprehensive plan for reforestation and tree planting across 30,270 hectares. The primary objective of this initiative is to mitigate flood risks by implementing agroforestry and reforestation measures in critical areas throughout Kasese, including riverbanks, urban spaces, and nearby hills. By strategically placing trees on steep hills and in urban areas, the project enhances climate change resilience and reduces costly infrastructure damages from floods.

The NBI interventions also contribute additional benefits to people and planet, including job creation, improved health, carbon sequestration, improved habitats for biodiversity, and avoided soil erosion.

Overall, we found this nature-based approach generates a total net benefit of USD 69.1 million, with each dollar invested in NBI yielding USD 5.44 in returns for society.

India's economic growth sprint sets the stage to deliberate and forge a comprehensive copper strategy within its overall critical mineral policy. With the intent of providing a starting point for this strategy, this policy brief focuses on the rationale, objectives, and actions needed to secure India’s copper supply.

This policy brief emphasizes the need for India to develop a comprehensive copper strategy. We recommend the following policy options to secure India’s copper supply:

1. Secure and diversify India’s primary copper supply: Diversify and forge strategic partnerships with key copper ore and concentrate supplier countries, such as Chile, Peru, Australia, the Democratic Republic of the Congo, and Zambia, amid rising geopolitical risks while supporting exploration and sustainable mining domestically.
2. Evaluate the need for trade reforms to promote the extent of domestic value addition: Urgently conduct a full assessment of the impact of India’s trade agreements with its major trade partners for copper products, including the need to extend countervailing duties that are set to expire starting in 2025. Also, assess the costs and benefits of reducing the custom duty on copper ore and concentrate to support the domestic smelting and refining industry and encourage domestic value addition.
3. Incentivize the domestic copper smelting, refining, and fabrication industry to meet circularity goals: Incentivize domestic copper smelters, refiners, and fabricators through capital or production-linked incentives while linking incentives to targets on material efficiency, recently issued copper quality standards, and circularity to better utilize scrap available in the country.
4. Rationalize the Goods and Services Tax structure for copper scrap: Rationalize the Goods and Services Tax structure on copper scrap by lowering the rate or bringing it under the Reverse Charge Mechanism to incentivize tax compliance within the recycling industry and support the formalization of the unorganized scrap sector.

Kenya's flower industry put the country on the map. Today, the sector is a vital part of its economy, accounting for 1.25% of GDP and employing more than 500,000 Kenyans.

With separate public and private sustainability standards operating in the same industry, the Kenyan government recognized the need to reduce duplication through collaboration and alignment of both standards.

Their efforts have made a huge difference to producers and exporters by easing procedures and reducing the costs and administrative burden of complying with different schemes.

This case study focuses on lessons learned from aligning public and private standards and the role that partnerships between government and industry actors play in facilitating industry development and sustainability.

We spoke with industry actors to understand how benchmarking between mandatory public and voluntary private standards contributed to success, looking at their motivations, factors behind the process, benefits for value chain actors, and implementation challenges. From these lessons, we seek to demonstrate how this approach can transform other agricultural value chains.

In response to Indonesia's initiative to reduce LPG use, this study assesses the feasibility of transitioning from LPG to induction stoves in urban households. Conducted in a district of South Jakarta, the research employed the Cooking Diaries methodology across two phases: Phase 1 involved participants using traditional LPG stoves while Phase 2 saw them transition to induction stoves. Data collection methods included detailed cooking diaries, rigorous energy consumption measurements, and comprehensive participant surveys. The study aimed to analyze various aspects of cooking behaviours, energy usage patterns, and user perceptions to provide a nuanced understanding of the adoption challenges and opportunities associated with induction stoves.

Participants generally expressed interest in induction stoves, noting their perceived efficiency in cooking speed and potential for long-term cost savings. However, challenges emerged during Phase 2, including initial concerns over electricity consumption spikes, kitchen layout constraints that necessitated adjustments, limitations with existing stove and cookware designs, and a learning curve in adapting cooking techniques to maximize induction stove performance. The study found that while some participants easily integrated induction stoves into their cooking routines, others faced difficulties and required additional support. However, there was generally a rapid familiarization with induction stoves that shows that even a very short testing period for the technology can reduce possible prejudices. Induction stoves are also likely to be more complementary tools and therefore may not be able to replace induction stoves completely in the short term. Finally, most participants cooked on very low-power modes but still received adequate cooing results without taking significantly longer, which could possibly increase the number of households (e.g., those with lower electricity connections) that can use induction stoves effectively.

The findings also underscore the critical importance of infrastructure improvements and targeted policy interventions to support the broader adoption of induction stoves. Infrastructure enhancements, such as upgrading kitchen designs and electricity grid capacities to handle increased demand from electric cooking appliances, emerged as a significant requirement for shifting to induction stoves. Policy recommendations include providing financial incentives or subsidies for households to switch from LPG to induction stoves, alongside educational initiatives about the experience of cooking with induction stoves. Addressing these challenges and implementing supportive policies is crucial to realizing Indonesia's goals of reducing reliance on imported LPG, promoting sustainable energy practices, and exploring environmentally friendly cooking practices nationwide.

At COP 28, countries reached a landmark agreement to transition away from fossil fuels. Ahead of COP 30 in 2025, countries are expected to submit their third generation of NDCs. These should reflect the COP 28 agreement to transition away from fossil fuels. Meeting the Paris Agreement goals while avoiding an unnecessarily abrupt and disruptive transition away from fossil fuels requires that governments plan for a managed phase-out of fossil fuel production. Countries have a timely opportunity to reflect this in their next-generation NDCs as well as their long-term low-emissions development strategies (LT-LEDS).

This report analyzes the last round of NDCs from the top 20 biggest fossil-fuel-producing countries: Algeria, Australia, Brazil, Canada, China, Germany, India, Indonesia, Iran, Iraq, Kuwait, Norway, Poland, Qatar, Russia, Saudi Arabia, South Africa, Turkey, United Arab Emirates, and the United States. Together, these account for 93% of global coal production, 80% of oil, and 77% of gas.

A third of the NDCs make no mention of fossil fuel production, while six stated an intention to continue or increase production. Only one, the EU, representing coal producers Germany and Poland, mentioned a pathway to decrease production.

The report identifies five elements governments can include in NDCs and LT-LEDS to reflect the outcome of the global stocktake at COP 28:

• information on national fossil fuel production, future production plans, reserves, and support
• targets and pathways to wind down fossil fuel production. This could be in the form of a commitment to reduce or phase out fossil fuel production by a target date
• policies and measures to disincentivize or constrain fossil fuel production, for example, moratoriums on development and production and export caps, reform of production subsidies, and increased taxes on extraction
• policies and measures to support workers and communities in the transition and diversify the economy away from fossil fuel production
• information related to equity and international support and cooperation

Watts in Store Part 2 is the second in a two-part series about energy storage in South Africa. It focuses on grid-located batteries and explores how to create an enabling environment for their deployment while maximizing key benefits and minimizing human rights violations and environmental, health, and safety risks. The report draws on interviews from over 70 stakeholders and provides an overview of possible solutions to some of the key challenges that were identified.

Natural infrastructure is a cost-effective solution to meeting Canada’s infrastructure needs that simultaneously addresses our climate, biodiversity, and other environmental, social, and economic priorities. There is an urgent need to design and implement more natural infrastructure projects in both urban and rural environments in Canada and increase funding for natural infrastructure.

This analysis estimated the amount of public grant funding directed toward natural infrastructure in Canada generally and across the Prairie provinces (Alberta, Saskatchewan, and Manitoba). It found the following:

• There is public grant funding available in Canada and the Prairies for ecosystem conservation, restoration, and engineered ecosystems, with one fund—the Natural Infrastructure Fund (NIF)—specially targeting natural infrastructure and hybrid infrastructure to create resilient and sustainable communities.
• 16 funds with a national scope analyzed in this study provide an estimated total of CAD 346.6 million annually toward natural infrastructure in Canada, with an estimated CAD 69.3 million reaching the Prairies.
• In addition, nine provincially funded programs in the Prairies were estimated to contribute CAD 29.1 million annually toward natural infrastructure projects, for a combined total of CAD 98.4 million consisting of both federal and provincial funding.
• Four of the largest funds—the Green Municipal Fund (GMF), the Investing in Canada Infrastructure Program (ICIP) and the ICIP COVID-19 Resilience stream, and the Disaster Mitigation and Adaptation Fund (DMAF)—allocated 0.4%, 0.4%, 13.2%, and 8.7% of their funding toward natural infrastructure respectively, with only a fraction of this funding (between 10% and 30%) directed to the Prairies. However, their impact on natural infrastructure funding in the Prairies remains significant due to their large size.
• From looking at how much funding is directed by these four largest funding programs toward different types of natural infrastructure projects, restored ecosystems represent the largest portion of funding at just over 57%, followed by engineered systems at 41.1%. Conserved ecosystems represented only a small percentage (1.7%) of all natural infrastructure funding, in part because of the lower costs of conservation compared to ecosystem restoration or engineered ecosystems.
• As interest in natural infrastructure grows and more natural infrastructure projects are considered and implemented, increased dedicated public funding streams that ensure natural infrastructure is distributed equitably across communities in need will be essential.

Nigeria’s economy remains heavily dependent on oil exports, but output has fallen in recent years. There is increasing focus on LNG in Nigeria, which is already the world’s sixth largest LNG exporter, with a 6% market share in 2022 and an annual production capacity of 22.5 million tonnes. In fact, the government has described 2021–2030 as the “decade of gas,” signalling its intent to focus on this resource. However, LNG production has been marked by conflicts, theft, and risks around the transport of gas, fuelling concerns about the industry's impact on local communities. In addition, environmental issues include gas flaring, greenhouse gas emissions, and health issues associated with emissions.

Despite increased demand for LNG in Europe due to Russia's supply reduction, long-term demand for LNG is not certain. Attempts to substitute declining oil revenues with LNG exports may not be successful due to uncertain future demands for LNG in the global marketplace—and more investments will be required to get the LNG ready for export over 5 to 10 years before any revenue can be realized. Efforts to expand LNG may see producer fossil fuel subsidies rise, stifling efforts for true economic diversification. Moreover, a major effort to expand Nigeria’s LNG exports presents a risk of stranded assets as European demand for gas declines in line with climate targets.

Global trends favoring clean energy may clash with increased LNG investment. The shift to a low-carbon world could leave Nigeria with another fossil-based income source determined by external global price fluctuations. Increasing investments in LNG increases the potential impact of asset stranding and may undermine the broader development interests for Nigeria.

In recent years, Export Development Canada and other Canadian crown corporations provided at least CAD 7.6 billion to CAD 13.5 billion annually (2020–2022) to the fossil fuel sector, compared to just CAD 147 million annually for domestic renewable energy.

Canada’s policy to end domestic public finance for fossil fuels should include the full scope of public finance instruments, such as loans, equity, grants, guarantees, and insurance, as these supports serve to de-risk projects and provide confidence in fossil fuel investments. A strong policy should

• reproduce the strengths of Canada’s international public finance policy;
• cover financing for all fossil fuels across their entire life cycle;
• cover existing public finance, including direct government investments;
• cover financing for infrastructure, technology, and facilities that support fossil fuels;
• preclude public financing for the decarbonization of the oil and gas industry and fossil-derived hydrogen;
• include in its scope non-combustion uses of fossil fuels;
• close loopholes from other fossil fuel finance reform policies;
• include specific requirements for transparency and reporting;
• include clear, central enforcement and accountability mechanisms; and
• provide guidance for redirecting public finance toward climate solutions.

Canada should publish a strong policy to end all public finance for fossil fuels this year, ensuring consistency with Canada’s climate commitments and setting an example for peers ahead of the country’s G7 presidency and updated nationally determined contribution.