Renewable Energy and Energy Efficiency Tax Incentives
Congress has established a critical set of tax credits and bond programs over the last decade to incentivize growth in a wide range of renewable electricity, renewable fuels, and energy efficiency sectors. Recent attempts to pass comprehensive credit extension legislation have included the incentives for: renewable energy production (from wind, geothermal, ocean energy, and more), energy efficient commercial buildings, new homes and home retrofits, investment in solar electric systems, the production and purchase of efficient home appliances, among others.
These credits have historically been relatively short term, causing lapses and uncertainty in the clean energy and energy efficiency industries due to the need for periodic re-authorization. This lack of continuity has hampered the development of these industries and their associated technologies. Further, boom and bust cycles in renewable energy development have resulted due to the lead time necessary to plan, finance, and develop a utility scale wind farm or biomass facility, or to design a state-of-the-art energy efficient office tower. The cycle begins with the renewable energy industry experiencing strong growth in development around the country during the years leading up to the expiration of the tax credits. Lapses in the credits then cause a dramatic slow down in the implementation of planned projects. When the credits are restored, the industry takes time to regain its footing, and then experiences strong growth until the tax credits expire again. And so on.
With the credits set to expire, Navigant Consulting recently estimated that further delay in extending these credits in 2008 places at risk 116,000 jobs and $19 billion in investment in the solar and wind industries alone. With the broader U.S. economy already shaky, it is imperative that Congress act now, by supporting the growth of the renewable energy industry through extending these tax incentives, to create rather than destroy hundreds of thousands of jobs and billions of dollars in domestic investment.
An extension of the clean energy tax incentives would have additional widespread benefits, including:
- Energy efficiency credits will help businesses and homeowners to reduce their skyrocketing energy bills through reduction in energy consumption;
- Growth in the generation of electricity from renewable resources will reduce natural gas demand, creating additional consumer energy bill savings;
- Increased energy efficiency and renewable energy will reduce global warming pollution from commercial, residential, agricultural, utility, and transportation sources of heat-trapping emissions;
- The job creation and investment spurred by an extension will boost particularly troubled sectors of the U.S. economy, including construction and manufacturing.
Recognizing the importance of these credits to the health of our economy across a vast range of industries, a coalition of supporters representing every state—including the largest retail chains, appliance manufacturers, consumer-owned utilities, home builders, environmental advocates, renewable energy technology manufacturers and producers, home insulators, and more—have joined forces in calling for immediate action to extend the package of incentives. Further, a recent Zogby International survey found that 85 percent of the U.S. public support the continuation of federal incentives designed to encourage the use of renewable energy technologies.
In May, the House of Representatives passed another package that included the tax incentives for renewable energy and energy efficiency. Now the Senate needs to pass a package and the president needs to sign it.
