Fiscal Feasibility of Countries’ Support Schemes towards their Climate Policies and Targets

With climate in focus, many countries and regions have committed to reducing carbon emissions through various pathways. Some countries have prioritized hydrogen/ammonia, low carbon fuels and carbon capture and sequestration (CCS) to reduce carbon footprint. Those deliberate choices result in higher costs of energy, given today’s technological capabilities. It is unclear whether the higher cost of energy would be a lasting phenomenon due to switching to alternative energy sources or transitory. Therefore, countries pledged various support schemes to promote and accelerate the energy transition, such as tax incentives in the US, carbon pricing and Climate Action Incentive Payments in Canada, and Renewable Portfolio Standard Scheme for power generation by hydrogen. The cost of these support schemes, sometime, are not transparent. The objective of this study is to understand the fiscal feasibility of countries’ support schemes towards their climate policies and targets.