ON THE ROAD TO CARBON NEUTRALITY: PROMOTING GREEN INVESTMENTS THROUGH FISCAL POLICIES

Abstract

This article examines the role of fiscal policy instruments in promoting green investments toward carbon neutrality. The analysis demonstrates that properly designed fiscal packages— including carbon taxes, green subsidies, tax incentives, specialized investment funds, and publicprivate partnership mechanisms—are decisive in attracting capital to the renewable energy sector. Drawing on the experiences of the European Union, the United States, and China, the study confirms that well-configured fiscal frameworks can simultaneously advance climate targets and economic development priorities. In the Azerbaijani context, the paper evaluates both the country's substantial renewable energy potential (wind, solar, bioenergy, hydropower) and the existing gaps in its fiscal framework, proposing concrete policy recommendations. Ultimately, the article assesses Azerbaijan's exit strategy from oil dependency through a fiscal diversification lens and offers a comprehensive budgetary-tax policy framework for achieving the country's 2030 energy targets.