Clean Power Plan, Renewable Energy Tax Credits Set to Drive Needed Clean Energy Transition
WASHINGTON (May 10, 2016)—A new analysis released today by the Union of Concerned Scientists (UCS) shows that federal renewable energy tax credits in combination with the Clean Power Plan provide an affordable way to accelerate the transition to clean energy, deliver significant economic and public health benefits, and make progress toward meeting the United States’ international climate goals.
“We found that the tax credits, which are offered for a limited time, drive near-term carbon reductions, while the Clean Power Plan continues the momentum to achieve more substantial long-term cuts in global warming emissions,” said Jeff Deyette, lead report author and director of energy research at UCS. “This powerful one-two punch is the type of ambitious action that’s required to help the United States meet its obligation under the Paris climate agreement.”
The UCS analysis found that the Clean Power Plan, along with the recent 5-year extension of the Production Tax Credit (PTC) and Investment Tax Credit (ITC) would:
- Reduce typical household electricity costs annually, for an average annual savings of $17 by 2030;
- Generate net consumer savings of $30.5 billion through 2030;
- Lead to $64 billion in energy efficiency improvements through 2030 to benefit consumers and reduce electricity sales nearly 7 percent;
- Yield 204 gigawatts (GW) of new wind and solar capacity by 2030, stimulating more than $216 billion in capital investments; and
- Provide health and economic benefits worth some $127 billion cumulatively through 2030 by decreasing emissions of carbon dioxide, sulfur dioxide and nitrogen oxides.
In February, the U.S. Supreme Court stayed the Clean Power Plan until the rule’s content is evaluated. Most states are moving forward with crafting compliance plans or engaging in discussions about them. This course of action makes sense as solar and wind projects require advanced planning, so the sooner states take advantage of the benefits these tax credits offer while they last, the better.
Compliance plans also offer states a significant opportunity to ensure the clean energy transition happens in an equitable way by targeting resources to coal-dependent communities and communities that bear a disproportionate burden of pollution from fossil fuels.
“The market is already shifting toward cleaner energy, but we found that the Clean Power Plan and federal tax credits are vital to accelerate that transition and provide significant consumer benefits,” said Deyette. “The Supreme Court’s temporary stay doesn’t change the reality of climate change or diminish the advantages of investing in a cleaner, more sustainable electricity sector. The analysis confirms that a strong commitment to renewables and energy efficiency leads to a more diverse electricity supply that not only cuts carbon emissions, but also provides significant public health and economic benefits nationwide.”
Greater emission reductions than what is shown in the analysis will be needed to ensure the U.S. meets its economy-wide emission reduction goal of 26 to 28 percent below 2005 levels by 2025 that it committed to in Paris.
“While these policies move us in the right direction, ultimately even deeper reductions in the power sector and economy-wide will be required for the U.S. to meet its short-term commitments and contribute to the long-term, mid-century decarbonization goal established in the Paris Agreement,” said Ken Kimmell, president of UCS. “This means future presidential administrations and Congress must step up to the plate with new and strengthened policies.”
Surprisingly, the analysis also found that some of the states suing over the Clean Power Plan are among those that would see the biggest financial gains if states agreed to nationwide trading of carbon allowances to comply with the plan. For example, Florida, Indiana, Ohio and Texas are all suing the Environmental Protection Agency over the Clean Power Plan despite the fact that they could generate $433 million, $321 million, $310 million and $804 million respectively through carbon allowance sales—dollars that could spur even greater investments in clean energy technologies and affected communities.
Deyette provides more information about the study findings in an accompanying blog post.