International experience in implementing fiscal incentives for energy transition: lessons for Ukraine

Abstract

The relevance of the study stems from the fact that foreign practice in recent years has accumulated significant experience in the consistent modernization of mechanisms for improving energy efficiency based on financial instruments. The value of analyzing global experience lies in the possibility of adapting and implementing proven fiscal incentive mechanisms into Ukrainian practice, which can accelerate the energy transition in Ukraine. The purpose of the article is to analyze the global experience in implementing fiscal incentives to ensure the energy transition and to develop recommendations for adapting the best international practices to Ukrainian realities. Research methods. The methodological framework of the study comprises a set of general scientific and special methods, including: comparative analysis – to compare foreign practices in the application of financial instruments; the method of systematization and classification – to group fiscal instruments; and the method of theoretical generalization – to substantiate the possibilities of adapting proven international models into Ukrainian practice.  Results. A detailed analysis of contemporary foreign practices in the implementation of tax and non-tax fiscal incentives to ensure the energy transition has been conducted. The key patterns and architectural features of designing fiscal incentive systems in both developed and developing countries have been identified. The most effective models for combining tax and non-tax instruments have been systematized.  The specifics of their impact on increasing the financial viability of projects aimed at modernizing generation and energy infrastructure have been outlined. Conclusions. Based on the generalization of international experience, the directions for adapting proven fiscal instruments have been substantiated. These directions are aimed at synchronizing the fiscal incentive mechanism with the requirements of European standards and integrating the domestic power grid into the EU energy markets. Additionally, they aim to mobilize investment capital to decentralize local generation, increase its autonomy, and ensure energy resilience under martial law and during the post-war recovery of Ukraine.