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1 Sean Bray, et al., The Role of Pro-Growth Tax Policy and Private Investment in the European Union's Green Transition 1 (2023)

handle is hein.taxfoundation/protaxpol0001 and id is 1 raw text is: CENTER FOR FAION GLOBAL TAX POLICY May 2023 The Role of Pro-Growth Tax Policy and Private Investment in the European Union's Green Transition Sean Bray Director of European Policy Daniel Bunn Tax Foundation President and CEO Joost Haddinga Research Assistant Key Findings The cost of physical assets to achieve a net-zero' global economy by 2050 could be around €8.1 trillion ($9.2 trillion) per year-an increase of €3.1 trillion ($3.5 trillion)2 compared to current spending on capital investment. One estimate suggests that the EU will need around €22 trillion of investment from the private sector between 2021-2050 to achieve the goals of the green transition. The EU's Net-Zero Industry Act alone will require between €42-96 billion of private investment between 2023-2030 to boost EU manufacturing capacity. A Member State's corporate tax rate, corporate tax base, and capital allowances policy significantly impact marginal investment decisions. Thirteen Member States have special tax policies targeted at increasing green investment. Rather than using narrow policies to promote specific investments, Member States should adopt full expensing to allow businesses to deduct the full cost of a capital investment in the year of acquisition rather than following a multiyear depreciation schedule or complying with narrow definitions of preferred investments.3 1 As the United Nations puts it, net zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions