Report

The Use of Green Tax Incentives for Renewable Energy Deployment in Emerging and Developing Countries

Emerging and developing economies face a USD 2.2 trillion annual investment gap to finance the energy transition. Green tax incentives—like income tax holidays, accelerated depreciation, and import duty relief on clean technologies—can help attract crucial investment. This report reviews how 35 countries design and implement these incentives, evaluates their effectiveness, and outlines best practices to align incentives with broader environmental goals.

September 18, 2025

Key Findings

  • Green tax incentives work best when governments combine them with other policies like national energy plans, power purchase agreements, local content requirements, and affordable financing through public or development banks.

  • Emerging markets and developing economies (EMDEs) rely more heavily on profit-based incentives, which often fall short in supporting early-stage projects where companies are not yet profitable. Cost-based incentives can lower risk more directly and unlock investment.

  • Governments have increasingly turned to tax incentives to attract green investment. These range from tax rate reductions and accelerated depreciation to customs duty exemptions. However, poorly designed measures can fail to generate meaningful investment, raising both efficiency and equity concerns.

  • Tax incentives should evolve as green technology matures, and markets grow.

The accelerating climate and energy crises make it urgent to expand renewable energy and boost energy efficiency. For many developing countries, the challenge is twofold: moving away from fossil fuels while also ensuring affordable, reliable energy reaches populations. Achieving the Paris Agreement’s 1.5°C target means tripling renewable energy capacity and doubling energy efficiency gains by 2030. Yet, investment in green energy remains uneven. Most private capital flows to low-risk, mature markets, leaving many emerging and developing economies grappling with limited fiscal space, high debt, and policy uncertainty. 

The use of tax incentives to attract green investment 

To attract investment, governments have increasingly turned to green tax incentives, ranging from tax rate reductions and accelerated depreciation to customs duty exemptions. These tools can redirect capital toward climate-aligned projects. But poorly designed or isolated measures can erode public revenue and fail to generate meaningful investment, raising both efficiency and equity concerns. 

This report examines how 35 emerging and developing economies design and implement green tax incentives. It explores the trends shaping their use and identifies opportunities to make them more effective.

Report details

Topic
Energy
Investment Law & Policy
Taxation
Impact area
Sustainable Economies
Publisher
IISD
Copyright
IISD, 2025
Report

Launching a Loss

An inventory of government support for British Columbia liquefied natural gas

Despite concerns about the liquefied natural gas (LNG) sector's economic viability and environmental cost, the governments of British Columbia (BC) and Canada have directed billions of dollars in public money toward expanding fossil fuel exports through this industry.

September 17, 2025

Key Messages

  • BC LNG projects will have benefited from CAD 3.93 billion in public support by the end of 2030. LNG Canada Phase 1 alone is on track to receive at least CAD 1.36 billion in government support by then. The project benefits from CAD 103.35 million per year in support from the BC government.

  • Polluters—not the public—should pay for emissions. LNG is a high emissions industry in part because it takes a lot of energy to liquefy natural gas. Reducing emissions in export facilities would require access to massive amounts of clean electricity, which the BC grid currently can't sustain.

  • Government support for LNG lacks transparency, leaving the public without adequate oversight of the significant financial and environmental risks taken on its behalf.

  • Government support de-risks private investment in LNG projects by shifting a portion of project costs, responsibilities, and liabilities onto the public. This makes private investors more likely to follow through with projects that would not go ahead on their own merit.

This report offers the most recent and comprehensive estimates of the extensive financial support for LNG exports provided by the Government of BC and the Government of Canada. It quantifies existing and forthcoming public financial support of LNG facilities and the pipelines directly feeding them. Because several annual subsidies apply only once projects are operational, the report includes a projection of cumulative financial support to the end of 2030. LNG sector support from the federal government includes CAD 1.62 billion in public finance and CAD 151.95 million in infrastructure funding. By 2031, the BC government will have provided around CAD 2.16 billion in support to the LNG sector through foregone revenue, reduced electricity rates, and enabling infrastructure. 

Government support for LNG has been provided via public financing, direct transfers, favourable tax rules, preferential electricity rates, infrastructure development, carbon tax exemptions, and a project-specific waiver on anti-dumping steel tariffs meant to protect Canadian manufacturing. If current policies remain unchanged, by 2031, total federal and provincial support for the sector will amount to CAD 3.93 billion. 

LNG development in BC was first proposed as a gateway to Asian energy markets to provide relief from declining U.S. demand and low North American prices. Current trade tensions have given new life to these arguments, but the actual public benefit of expanding LNG production demands greater scrutiny. A projected glut of LNG supply over the coming decade is expected to drive down global prices. Comparatively expensive Canadian LNG may struggle to compete, raising the risk of projects becoming unviable stranded assets. A closer look is vital due to the scale of government financial support, the uncertainty of LNG markets, and the questionable long-term economic viability of Canadian LNG in a world transitioning away from fossil fuels. 

Key recommendations

  • Implement the federal government's 2022 commitment to eliminate all domestic finance for fossil fuels and update the Inefficient Fossil Fuel Subsidies Framework to exclude funding for LNG infrastructure.
  • Enforce the BC government's requirement for LNG facilities to be fully net-zero by 2030.
  • Exclude LNG facilities from receiving funding under the Clean BC Industry Fund.
  • Strengthen the provincial output-based pricing system, removing exemptions for new entrants and fugitive emissions.
  • Charge LNG projects the full cost of grid electricity.
  • All projects under consideration should undergo a robust economic analysis ensuring economic viability under provincial and federal climate policy-compliant scenarios.
  • Phase out tax subsidies, including provincial sales tax deferrals on construction costs and the Natural Gas Tax Credit.
  • Increase transparency of reporting on government funding to enable full accounting of the economic costs of LNG development.

Report details

Topic
Climate Change Mitigation
Energy
Subsidies
Project
Re-Energizing Canada
Impact area
Climate
Sustainable Economies
Publisher
IISD
Copyright
IISD, 2025
Report

Mapping India's State-Level Energy Transition

Chhattisgarh

India's states are critical to achieving national clean energy commitments. This report maps how the Union and state governments have supported different types of energy in Chhattisgarh from fiscal years (FY) 2020 to 2024. By mapping fossil and clean energy support from the Union and state governments, the report aims to improve transparency, strengthen accountability, and guide a responsible shift toward clean energy and economic diversification for Chhattisgarh.

November 6, 2025

Key Findings

  • The total support (INR 12,648 crore) came in the form of subsidies, while INR 4,024 crore was invested by public sector undertakings. Subsidies for coal—almost all from the Union government—have increased annually since FY 2020, and in FY 2024, they made up 26% of all quantified energy subsidies.

  • Sixty-two percent of all quantified energy subsidies are for electricity transmission and distribution, and low-priced electricity makes up ~90% of this. Chhattisgarh state government provides 98% of these electricity subsidies.

  • Clean energy subsidies constitute only 8% of total quantified subsidies in Chhattisgarh—most of this is from the state government. Union government support to renewables, much of which flows to large grid-scale projects, has been missing because of the low development of such projects in the state.

  • Energy-related revenues in Chhattisgarh reached INR 22,532 crore—22% of the state’s total revenues. Seventy-eight percent of the energy-related revenues came from fossil fuels—38% from coal and 40% from oil and gas—leaving the state heavily exposed to shifts in future energy landscape.

This report measures government support by quantifying energy subsidies, public sector undertakings for fossil fuels, electricity transmission and distribution, renewable energy, biofuels, and electric vehicles between FY 2020 and FY 2024. The report also quantifies the government's energy revenues in Chhattisgarh from different types of energy. This is the first time a report has quantified the combined value of Union and state government support in Chhattisgarh's energy sector. 

We identified four times more subsidies for coal, oil, and gas than for clean energy. Overall, fossil fuel subsidies have doubled since FY 2020. 

Key recommendations include the following:

  • The Chhattisgarh Chief Minister's Office has prepared a vision document that sets a target of 66% of renewable energy in the state's energy mix by 2047. The state's vision document outlines a renewable-led generation plan but can do more by establishing clear state-level net-zero targets that help transition government support from fossil to clean energy.
  • Better targeting of electricity subsidies to low-income households can help control growing fiscal expenditure. The savings can be redirected into rooftop solar, solar pumps, small-scale wind, and repurposed thermal assets. 
  • Diversify revenue beyond coal, oil, and gas by enhancing production of minerals like iron ore, bauxite, and limestone, and align industrial development with the state’s long-term decarbonization goals. 
  • Establish a state-led coordination committee with key departments and stakeholders to design social support mechanisms for coal-dependent workers and communities. Collaborating with the Ministry of Coal and coal firm Southeastern Coalfields Limited to diversify operations and create alternative employment can drive just transition planning in the state. 

Report details

Report

Critical Minerals for Africa's Inclusive Growth and Development

Understanding Africa's critical minerals as a transformative opportunity to accelerate inclusive growth, industrialization, and regional integration.

August 18, 2025

Key Messages

  • Africa's critical minerals represent a transformative opportunity to accelerate inclusive growth, industrialization, and regional integration.

  • Realizing this potential requires a deliberate shift away from exporting raw mineral materials to building competitive value chains, strengthening governance, improving infrastructure, and securing sustainable financing.

  • Africa's success in the global critical minerals economy will depend on its ability to strategically position itself not only as a supplier of raw materials but as a major producer of value-added materials essential to the global energy transition.

Critical minerals and metals are central in the global energy transition, advanced manufacturing, and digital transformation. The increasing demand for minerals such as cobalt, lithium, nickel, rare earth elements, and platinum group metals highlights their strategic significance. However, the definition of criticality is not uniform across countries; it is somewhat shaped by national economic and strategic priorities, supply chain vulnerabilities, and policy objectives.

The report provides an overview of the diverse approaches to defining what criticality is in light of global trends. While critical minerals strategies are often associated with industrialized economies seeking to secure supply chains, resource-rich countries—including many in Africa—increasingly adopt critical minerals policies to maximize value creation, economic diversification, and industrial development. 

Given the global nature of critical mineral supply chains, the report calls for greater international cooperation, particularly through platforms such as the G20. It emphasizes the need for fair and inclusive governance frameworks that balance security of supply concerns with Sustainable Development Goals. Strengthened partnerships between African and global actors can promote responsible sourcing, industrial growth, and technological innovation to ensure the transition to a mineral-intensive future is equitable for all economies. 

The report is a co-publication of the African Development Bank and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).

Participating experts

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Report

Technology Transfer for Climate Change Adaptation

Bridging climate and trade policy perspectives

Exploring the concept of adaptation technology in trade and climate policy fora and how better integration of climate and trade policies can enhance adaptation technology transfer in developing countries.

August 26, 2025

Policy Recommendations

  • Stronger integration of climate and trade policies is needed to accelerate technology transfer for climate change adaptation, especially in developing countries.

  • Trade policy-makers should actively consult national adaptation strategies and participate in adaptation planning processes to ensure trade policies support technology transfer for climate resilience.

  • Climate policy-makers should clearly identify and communicate adaptation technology needs and barriers in national adaptation plans and assessments to align with trade policy frameworks.

  • Regional and bilateral trade agreements can be leveraged to address context-specific adaptation needs by including tailored provisions for technology cooperation and capacity building.

This publication analyzes how technology transfer for climate change adaptation is addressed at the intersection of climate policy and trade policy frameworks, with a particular focus on the Global South. It reviews the roles of the United Nations Framework Convention on Climate Change and the World Trade Organization, highlighting barriers, country experiences, and negotiations around trade as a driver for adaptation technology transfer. The report critically explores definitions of adaptation technology as well as challenges and examples of adaptation technology transfer. It further assesses trade policy mechanisms and documents how countries identify technology needs and barriers through national adaptation plans and technology needs assessments. The report concludes with lessons and actionable recommendations for trade and climate policy-makers and development partners to better link climate and trade policies, advancing technology transfer to enhance climate resilience in the Global South.

Report

Mining Policy Framework Assessment: Somalia

Examining Somalia's mining laws, policies, and regulations and identifying gaps, strengths, and recommendations for improvement.

August 20, 2025

Key Messages

  • Somalia is making strides to modernize its legal framework governing the mineral sector.

  • Somalia's fiscal regime for extractives is clear and simple for both investors and the government administration.

  • Somalia's current mining legislation is outdated, and a bill for a modern mining law drafted in 2023 awaits enactment.

  • The extent of the artisanal and small-scale mining in Somalia is unknown.

Somalia is a relatively new country with a small mining sector comprising artisanal and small-scale mining operations. The government is seeking to take its first steps toward coherent mining governance while planning for the future. 

This report presents an assessment of Somalia's readiness and capacity to implement the Mining Policy Framework (MPF) of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF). It presents the context for MPF implementation in Somalia and focuses on key policy and legislative strengths and weaknesses.

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Report

Oil and Gas Expansion in the Colombian Amazon

Navigating risks, economics, and pathways to a sustainable future

This report examines the economic and wider risks of continued oil and gas expansion in the Colombian Amazon. The current government has made important steps to shelve blocks in protected areas. Nonetheless, ongoing and potential new fossil fuel activities in the region threaten people and the environment. The economic and energy security case for further expansion is, however, poorly substantiated. Permanently removing the unassigned oil and gas blocks is recommended.

August 19, 2025

Policy Recommendations

  • Permanently shelve unassigned blocks: cancel ongoing and future awarding rounds and remove all unassigned blocks from the National Hydrocarbon Agency's Mapa de Tierras.

  • Defend and restore biodiversity: protect at least all key biodiversity areas with effective area-based conservation measures, strengthen the environmental standards for new licences, expand environmental governance schemes in Indigenous territories, and leverage the region's bio-economy potential.

  • Leverage Colombia's environmental and climate diplomacy: anchor Colombia's leadership in climate and biodiversity topics by scaling up its commitment to initiatives like Beyond Oil and Gas Alliance, the Fossil Fuel No Proliferation Treaty Initiative, and the Amazon Cooperation Treaty Organization.

  • Consolidate the transition away from fossil fuels: plan a managed decline of the fossil fuel industry in Putumayo and other departments, support renewable energy projects, anchor Colombia's leadership in international initiatives, and align domestic policy with transition timelines.

This report examines the economic and wider risks of continued oil and gas expansion in the Colombian Amazon, a region of immense ecological and cultural significance. Colombia has positioned itself as an international leader in climate and environmental policy and in late 2022, the government announced its intention to end new oil and gas exploration and called for a transition away from fossil fuels. Nonetheless, ongoing and potential new fossil fuel activities in the region, encouraged by narratives around economic profitability and energy security, continue to threaten the livelihoods and human rights of Indigenous Peoples and local communities, the region's rich biodiversity, and its carbon sinks. 

The economic and security case for fossil fuel expansion in the Amazon is, however, poorly substantiated, as shown by this report. Instead, permanently removing the unassigned oil and gas blocks, managing declining oil production, investing in the region's rich natural and human capital, and safeguarding its communities would promote sustainable development and deliver Colombia's environmental and climate commitments. This would consolidate its international leadership and attract further investments into green growth sectors like renewables, eco-tourism, and sustainable agriculture, supporting its USD 40 billion climate and nature investment plan.

Report details

Topic
Climate Change Mitigation
Energy
Environment, Conflict and Peacebuilding
Just Transition
Impact area
Climate
Sustainable Economies
Publisher
Earth Insight
Copyright
Earth Insight, 2025
Report

Cybersecurity and International Trade

Understanding the policy landscape

Cybersecurity is a critical foundation for enabling secure and trusted digital flows in today's interconnected global economy. However, cybersecurity threats are growing in both scale and complexity, resulting in rising economic costs and posing significant risks to national security, political stability, and social systems. In response, governments worldwide are increasingly implementing measures and regulations justified on cybersecurity grounds.

August 6, 2025

Key Messages

  • Governments are adopting more safety measures amid rising cybersecurity threats. Such measures—many of which have implications for international trade—range from data requirements to licensing schemes and technical standard requirements to outright bans on certain digital technologies and services.

  • International trade rules shape how cybersecurity measures can be implemented and offer opportunities for cooperation. While some measures may conflict with WTO rules, trade agreements are also emerging as platforms for international cooperation on cybersecurity.

  • Strengthening cybersecurity capacity is essential for global digital resilience. Given the interconnected nature of digital systems, weak cybersecurity in one country can create risks for all. Trade agreements should enhance support for countries to implement effective cybersecurity frameworks.

Common policies include data-related requirements, technical standards, and controls on the import and export of digital goods and services. The growing proliferation of such measures is impacting trade, including digital trade. Developing countries, in particular, are paying increasing attention to cybersecurity issues and considering how these measures affect digital trade opportunities as well as broader social and development priorities. 

This policy primer provides an overview of the main types of cybersecurity measures being implemented at the national level, their underlying policy objectives, and their trade implications. It examines how different types of cybersecurity measures interact with international trade rules and explores how cybersecurity is addressed in trade agreements, including World Trade Organization (WTO) law and newer trade agreements. The paper highlights critical gaps in current trade frameworks, especially concerning capacity building and international cooperation, and concludes with policy considerations for strengthening cybersecurity governance to support inclusive digital trade and development. 

This report is part of a policy primer series, funded by the Swedish International Development Cooperation Agency (SIDA), aimed at deepening understanding of the key policy and regulatory foundations that shape today's digital economy.

This is the second report of the Building Blocks of Digital Trade Regulation series. You can continue exploring the series here:

Report details

Topic
Trade
Project
Digital Trade
Impact area
Sustainable Economies
Publisher
IISD
Copyright
IISD, 2025
Report

Indigenous Peoples in the Rio Conventions

Representatives of Indigenous Peoples made significant advances in 2024 at the back-to-back-to-back Conferences of the Parties of the three Rio Conventions. Years of advocacy paid off in expanded arrangements for their engagement in biodiversity, climate change, and desertification talks. Yet, some obstacles remain.

July 31, 2025

Key Messages

  • Sustained advocacy of Indigenous Peoples as rights-holders has paid off with increased understanding in the international arena of Indigenous Peoples' valuable contributions to sustainability and deeper institutionalization of their participation.

  • Advances in the human rights system have helped open avenues for Indigenous Peoples in the Rio Conventions, though acceptance of human rights language is inconsistent and may act as a lightning rod.

  • Access to direct funding remains the key demand of Indigenous Peoples' organizations under all three Rio Conventions, both for their participation in meetings and continuation of customary practices on the ground.

  • Indigenous Peoples have shown that coordination, coalition building, and articulation of their rights can make real change.

The Earth Negotiations Bulletin team has been a decades-long witness and record of this advocacy. In consultation with Indigenous experts and drawing from more than 30 years covering the United Nations (UN) Framework Convention on Climate Change, the UN Convention to Combat Desertification, and the Convention on Biological Diversity, this report explores where Indigenous Peoples' negotiators made progress in 2024, which lessons could apply across silos to other environmental negotiations, and what obstacles still remain as the world struggles to respond to the triple planetary crisis. 

With special thanks to Jennifer Corpuz, Preston Hardison, Donna Mitzi Lagdameo, JulietGrace Luwedde, Marco Montoiro, Graeme Reed, and Camila Zepeda.

Report details

Topic
Governance and Multilateral Agreements
Project
Earth Negotiations Bulletin
Impact area
International Governance
Publisher
IISD
Copyright
IISD, 2025
Report

What Does the First Global Stocktake Mean for the National Adaptation Plan Process?

The outcome of the first global stocktake under the Paris Agreement painted a clearer picture of the state of global climate action while offering a blueprint for countries to strengthen domestic efforts on mitigation, adaptation, loss and damage, and support. What does this mean for developing countries' national adaptation plan (NAP) processes? And how could the NAP process facilitate the implementation of the outcome of the first global stocktake? 

July 24, 2025

Key Messages

  • Accelerating adaptation is more urgent than ever in this critical decade, and the NAP process continues to be the main vehicle for developing countries to systematically enhance adaptive capacity, strengthen climate resilience, and reduce vulnerability to climate change.

  • Developing countries' NAP teams could reflect on the global-level assessment of progress and validate their current plans and implementation trajectories, and integrate the recommendations, good practices, and opportunities identified by the outcome of the first global stocktake into their NAP.

  • Countries could leverage the global stocktake outcomes to advocate for support on means of implementation, including finance, capacity building, and technological transfer, for NAP implementation.

  • Countries should contribute actively to the second global stocktake to ensure developing countries' views and priorities are captured by the global collective assessment process toward the global goal on adaptation and add visibility to the importance of the NAP process.

In 2023, the first global stocktake concluded at the 28th Conference of the Parties (COP 28) of the UN Framework Convention on Climate Change (UNFCCC) in Dubai, giving a clearer picture of the state of global climate action. It highlighted that despite near-universal actions to implement the Paris Agreement, countries are still not on track to meet the long-term temperature and adaptation goals. At the same time, it underscored the critical role of the NAP process in helping developing countries systematically identify and address their medium- and long-term priorities for adapting to climate change. 

This report summarizes the key messages on adaptation from the outcomes of the first global stocktake for developing countries' NAP teams, adaptation policy-makers and practitioners, and UNFCCC negotiators. It also provides recommendations and actionable steps on how countries can implement the decisions as part of their NAP processes.

Report details

Topic
Climate Change Adaptation
Gender Equality
Nature-Based Solutions
Project
NAP Global Network
Impact area
Climate
Publisher
IISD
Copyright
IISD, 2025