Tax-line financing mechanisms that allow a commercial or private property owner to finance the up-front cost of energy, water or other eligible improvements on a property and then pay the costs back over time via tax or service charges.

Instrument category

Municipal own source revenue (OSR) and policy steering instruments

Implementation status

Low - limited evidence available

Enabling conditions and success factors
  • A reasonably well-developed taxation system should be in place.
Instrument benefits
  • This method reduces upfront costs for energy efficiency measures, helping residents and businesses to reduce their energy costs and environmental impact via affordable loans that can be paid off in instalments.
Challenges and risks to implementation
  • Lack of trust and transparency between local governments and taxpayers can be a major obstacle in cities with less developed tax systems.
Case studies

Tax-line financing for energy efficiency with Property Assessed Clean Energy (PACE) Program in the USA

View case study

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