Although many local authorities in Cyprus have committed to the Covenant of Mayors movement for implementing sustainable energy and climate actions, limited competencies and authorization in their territory withhold effective, non-time-consuming solutions. Consequently, local authorities in Cyprus were unable to introduce a new green taxation category and further support the sustainable energy and climate action plans in place.

Αn innovative three-way approach was identified and promoted in Nicosia Municipality for a successful application of green taxation. The first step was the analysis of the current legislative framework and how the green fees can be adapted inside a taxation category without any Law revision. The second step was the selection of a suitable taxation category for the municipality, where the green fiscal policies will be approved and applied in their territory. Finally, the third step was the establishment of a green -revolving fund from which the revenues of the green taxation will finance sustainable actions supporting RES and energy efficiency measures.

The results were impressive given the fact that many times in the past, Cypriot local authorities have been trying to apply green taxation without any success. Nicosia Municipality has approved green taxation under Hotel Accommodation Tax and the revenues collected will compensate all the Hotels in its region, with free Energy Audits as well as the funding of two awareness events each year.