Chemical Leasing Toolkit

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Subsidies and taxes

Financial instruments are another means for governments to influence business practices and innovations. Subsidies and tax reductions can be used to encourage companies to shift towards more sustainable technologies and business models. Higher taxes can be used to discourage unsustainable solutions, such as energy-intensive technologies and materials and also stimulate the usage of eco-innovative business models as Chemical Leasing.

Chemical Leasing needs a certain visibility and a substantial number of successful case studies to be broadly implemented. A number of successful case studies have been carried out in recent years, but many companies are still reluctant to adopt a new business model. Taxes and subsidies could help lower this resistance to change.

Examples:

Subsidies Taxes
Subsidies for the use of renewable energies Taxes on pollutants
Subsidies or tax reductions for innovative technologies or products Taxes on electricity to encourage the use of energy-saving technologies
Subsidies for the installation of BAT/BEP  

Challenges:

  • measuring the “degree of sustainability” and distinguishing between sustainable and unsustainable solutions (e.g. when is an innovation considered sustainable?)
  • convincing governments to use new subsidies and/or taxes (political will, sensitive topics)
  • countering the argument that Chemical Leasing, as a business model, should not need subsidies or privileged taxation

 

Ways to overcome barrierse:

  • offering subsidies to companies that apply Chemical Leasing in pilot cases (“only new chemical uses” or “new regions for a first application of Chemical Leasing”) in order to create “lighthouse effects”
  • setting higher taxes on inefficient technologies and hazardous substances
  • organizing government exchanges to compare their respective experiences in using financial instruments to promote Chemical Leasing