Boost Cybersecurity with Green Energy Tax Incentives
▼ Summary
– Current compliance fines are often ineffective as large tech companies treat them as a manageable cost, while smaller firms lack the budget for robust cybersecurity.
– Governments should adopt tax incentives, similar to green energy policies, to financially motivate all technology companies to prioritize data protection and “security by design.”
– A “digital trust label” for products, modeled on energy efficiency labels like ENERGY STAR, would provide transparency and help all buyers make informed, security-conscious purchasing decisions.
– Effective policy must account for different types of technology producers (like dominant gatekeepers, replaceable apps, and innovators) and buyers (both commercial and consumer).
– A combined approach using tax credits for established firms and subsidies for innovators can create market-wide incentives for better data security while maintaining necessary accountability through penalties.
Governments have traditionally relied on compliance penalties to enforce cybersecurity, but this approach often fails to drive meaningful change. Large, ubiquitous technology companies frequently treat fines as a manageable cost of business, while smaller firms struggle with limited security budgets. A more effective strategy could involve adapting the successful incentive models used in green energy policy to promote robust data protection. By combining financial carrots with clear transparency tools, we can motivate both technology producers and buyers to prioritize security.
For too long, regulatory efforts have focused narrowly on corporate purchasing, despite the blurred lines between enterprise and personal security in today’s remote work environment. Effective policy must account for the entire ecosystem, which includes different types of technology creators and users.
On the production side, companies generally fall into three groups. Gatekeepers are dominant platforms that users cannot easily replace, similar to those outlined in laws like the EU’s Digital Markets Act. Then there are replaceable technologies, such as many SaaS applications or consumer devices, where buyers have viable alternatives. Finally, innovators represent new market entrants that should embed security from the ground up.
The buyer landscape is equally diverse. Commercial buyers operate under third-party risk management rules, while consumer buyers typically lack both insight and education regarding cybersecurity risks when making purchases.
A powerful tool to bridge this information gap is the concept of a digital trust label, functioning much like an ENERGY STAR rating for data protection. This label would provide immediate, understandable visibility into a product’s security posture. Studies in environmental behavior show that clear labeling influences purchasing decisions, even prompting consumers to pay a premium for aligned values. Initiatives like the German IT Security Label Directory already demonstrate how such transparency empowers all buyers, fostering a market where security becomes a valued differentiator.
To make these labels impactful, governments can leverage taxation and subsidy frameworks inspired by environmental policy. A tax framework offering rebates or credits for labeled products creates a “demand-pull” incentive. This makes more secure options financially attractive, encouraging buyers to choose them. Research on electric vehicle adoption confirms that upfront cost reductions through rebates significantly boost purchases of sustainable technology.
This incentive structure benefits each type of producer differently. For gatekeepers, it rewards maintaining high security standards with financial benefits. For replaceable technologies, it makes secure alternatives more competitive, prompting buyers to switch. For innovators, it helps create a market that values and rewards security-by-design from the start.
Specifically, reduced tax rates or credits for achieving a digital trust label can encourage ongoing investment in security. For larger firms, such credits can be additive, leading them to reinvest savings into further research and development, fostering a cycle of improvement that aligns with broader regulatory goals like those in NIS2.
For new innovators, direct subsidies are crucial. These companies often operate with constrained resources and may rely on open-source components vulnerable to supply chain attacks. A “technology-push” subsidy reduces their development costs and supports building security in from the beginning. An optimal model combines both push (subsidies for producers) and pull (incentives for buyers) policies, enabling innovators to build securely without passing excessive costs to the market.
While penalties for non-compliance remain a necessary deterrent, they are insufficient alone. By creating a parallel to green energy incentives, governments can use financial rewards to promote cybersustainability. This multi-lever approach, transparent labels, buyer incentives, and producer support, works to align economic interests with robust data protection, building a more resilient digital ecosystem for everyone.
(Source: HelpNet Security)
