Estimation of Tax Expenditures Stimulating the Energy Sector Development and the Use of Alternative Energy Sources in OECD Countries

Abstract

The energy crisis caused by global structural changes in the economic sphere is the cause accelerating the energy transition based on the concept of sustainable development. This study is to test the hypothesis about the incentive effect of tax expenditures on alternative energy and energy conservation. The objects of empirical research are the EU, OECD countries, OECD partner countries and Russia from 2018–2020. The tools of scientific research are based on methods of economic–statistical and comparative analysis and expert judgments. The concept of tax expenditures in terms of decarbonization is analyzed using a systematic approach. The integrated methodological approach shows the relationship between the tax policy and government strategies in achieving sustainable development goals to ensure the transition to rational energy consumption patterns and sustainable energy sources. The authors analyze incentives for the energy sector and alternative energy sources in the considered groups of countries, and they assess the scale of tax expenditures in the energy sector for OECD countries. There are two types of tax expenditures for achieving environmental sustainability—increasing renewable energy sources and improving the energy efficiency. The authors apply the multivariate average formula to assess the scale of tax incentives in OECD countries. The results are typified depending on the scale of tax expenditures as one of the tools and these results are grouped according to the dynamics. In the presented sample, a wide range of tax benefits and preferences is typical for the leading countries in the ranking. The countries at the bottom of the ranking support fossil fuels, but they have already started the energy transition.