Study On The Development Of New Energy Tax Incentives And Subsidies Of Major Developed Countries

Energy is the lifeblood of the national economy, and also the material basis of acountry’s economic and social development. Although the large number of miningand use of fossil fuels has brought huge benefits to the rapid development of theworld economy, it also causes resource reserves decline, serious environmentalpollution, global warming and some other negative effects. Therefore, countries haverealized the importance of finding alternative energy sources other than fossil fuels,so new energy industries have come into being. Large reserves, renewability, littlepollution are the major advantages of new energy. Solar energy, wind, biomass,geothermal energy, ocean energy, etc are commonly been seen as new energy. Due tosome economic and technical factors, new energy has not yet been in a large-scaleuse.Given the inherent ‘green’ nature of the new energy products, countries use avariety of comprehensive methods to promote the development of new energyindustries, among which tax incentives is a representative one. Legality, coerciveness,fixity, economics, etc are the notable features of tax. The new energy industry needsa large initial investment, so the economic effect is not obvious in the short-term. Ifnew energy enterprises are taxed at the normal tax rate, it will harm the enthusiasmof the new energy enterprises to invest in the industry. Moreover, the positiveexternality of new energy industries quite fits the country’s development strategy,since it plays an important role in optimizing energy structure and improving theecological environment. The implementation of the new energy tax incentives canreduce the burden on industry development in order to promote the rapiddevelopment of the industry.New energy industry development started early in several major developedcountries, such as the United States, Germany, the United Kingdom, Japan and so on.With the changes in the international and domestic energy situation, countries havetaken various tax incentive measures to encourage the development of new energy industry at different time periods. Those measures cover almost all forms of the newenergy sources. Companies who are engaged in new energy industry and individualswho consume new energy products are entitled to enjoy the benefits of the taxincentives.Energy trade is no longer rare in today’s WTO trading system. Those newenergy products that have enjoyed the tax benefits at home, if exported to othercountries, may be subject to Agreement on Subsidies and Countervailing Measures(hereinafter referred to as ‘SCM Agreement’). Whether GATT Article20can beinvoked as a defense in violation of the SCM Agreement is still controversial. So far,the WTO Dispute Settlement Body (DSB) has dealt with several cases related to newenergy resources, but none of them are related to the question that whether taxincentives constitute a "subsidy" issue according to SCM Agreement. If the panelshould circulate their report which involves the former question in the future, it maybecome a new great development in WTO dispute settlement case law.China is a country who produces and consumes a large number of energy.Although for a long time, traditional energy sources such as coal and oil are theprimary energy forms, China attaches great importance to the development of newenergy industries. The development of solar, wind and other new energy sectors haveformed a certain scale. The existing new energy tax incentive measures spread in therelevant laws and regulations. Among them, laws stipulate some general principles,while regulations stipulate more detailed and specific provisions. This makes thesetax incentives low systematic level, low effects and weak stability.Through the analysis of the tax incentives for new energy productsimplemented by several typical developed countries, China can learn some lessonsfrom their development experience. Firstly, improve our energy legislative system,and appoint a clear and unified energy management agency. Secondly, improve theenergy tax system, and integrate with the existing rules. Thirdly, China shouldstrengthen international cooperation with other countries in the new energy field.Fourth, be cautious when making new energy tax incentive policies to avoidbreaching China’s certain international obligations.