SPECIAL ECONOMIC ZONE AND FREEPORT DESIGNATION

Government can designate a particular area and offer qualifying businesses a coordinated package of support for locating and investing there. A special economic zone may combine tax relief, access to prepared land and infrastructure, and a local team that helps firms obtain permits. A freeport also uses special customs arrangements, such as deferring duties on imported equipment. The package brings these measures together so a firm's investment can proceed with the services and permissions it needs. For CDR, authorities could target removal plants, CO₂ terminals and equipment manufacturers near suitable energy and storage access. Government must specify which firms receive each benefit and which public body provides it. Environmental assessment and project permits remain part of establishing a business in the zone.

Authorities should first identify the investment they want to attract and what prevents firms from establishing it at the proposed location. This determines the area, the eligible activities and the support needed. A removal plant may need a power connection and access to CO₂ transport, while an equipment manufacturer may need suitable premises and help importing machinery. Authorities can then assemble the relevant tax, customs, land, infrastructure and administrative measures into one offer. For each measure, they should specify the responsible body, delivery date, eligibility conditions, duration and rules for recovering support if a firm breaches its commitments. Infrastructure completion and the period for claiming tax relief should fit the same investment timetable. The zone's local team must explain which permits it can issue and which require decisions from other authorities. The total budget should show public spending and tax revenue forgone, including costs that arise in different departments.

Combining support in one place can make an investment viable where several obstacles have to be addressed together. Tax relief lowers specified business costs, customs arrangements can defer duty payments, prepared land and shared connections provide usable sites, and a local team helps firms navigate the required permits. When authorities deliver these measures on a compatible timetable, firms can plan around a more complete offer. Nearby removal plants and suppliers may share utilities, transport facilities or specialist services. This can attract additional removal capacity, manufacturing and employment where the package changes firms' investment decisions. Evaluation should establish how much activity is newly created and how much has moved from elsewhere.

Reliefs can subsidise relocation or activity that would have happened anyway, reducing public revenue without additional climate benefit. One delayed component, such as a power connection, can leave firms unable to use other benefits before they expire. Public spending and tax relief can also continue after the original investment case has weakened. Where authorities borrow for infrastructure against expected growth in local tax receipts, often called tax-increment financing, they need conservative forecasts and an agreed payer if receipts fall short. Poor oversight may favour landowners or incumbent firms, while pressure to accelerate approvals can weaken scrutiny of environmental impacts. Competition between jurisdictions can enlarge subsidies without increasing the underlying market. Expiry dates, recovery rules and independent evaluation should apply to the package and its individual measures.

Authorities should compare new investment, jobs and qualifying removal activity with similar locations outside the zone, including activity lost elsewhere. Reports should show public spending, tax revenue forgone and who receives the benefits. Permit times, use of shared assets and the arrival of new suppliers can reveal which parts of the package are useful. These findings should determine whether individual reliefs or services are continued, redesigned or withdrawn when they expire.

Tax, customs and finance authorities should agree which benefits they can authorise and how the costs will be recorded. Ports, utilities and prospective tenants should confirm the services, investment and staffing they expect to provide or use. Local authorities, workers and communities should shape employment access and local benefit commitments. Independent evaluators need access to firm-level investment and employment data to assess whether the zone attracts additional activity or mainly relocates it.

National governments can authorise the tax and customs arrangements used by freeports and special economic zones. Regional and municipal authorities can jointly designate or operate zones where law gives them relevant land, tax or development powers. Each body can promise only benefits within its authority; national customs treatment requires a national decision.