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The Next Generation of Federal Clean Electricity Tax Credits

The Next Generation of Federal Clean Electricity Tax Credits

Full Title: The Next Generation of Federal Clean Electricity Tax Credits
Author(s): Dr. Varun Sivaram and Dr. Noah Kaufman
Publisher(s): Columbia University Center on Global Energy Policy
Publication Date: June 3, 2019
Full Text: Download Resource
Description (excerpt):

The federal tax incentive for wind energy expires at the end of 2019, and the incentive for solar energy will begin phasing out in 2020. Over multiple decades, these policies have succeeded in promoting the development and deployment of wind and solar technology, which today are rapidly gaining market share in the US electricity sector.

But it would be a mistake to declare “mission accomplished” and assume no successor policies are needed. After all, well over half of US electricity is still produced by fossil fuels that release climate-warming carbon dioxide and toxic local air pollutants into the atmosphere. It would also be a mistake to simply extend today’s incentives indefinitely into the future. These policies have ballooned in cost and are ill suited to spur innovation that would improve upon the existing set of technology options for reducing US carbon emissions.

Federal policy makers should design a new generation of tax incentives as one element of a national plan to decarbonize the US electricity sector almost entirely by midcentury—an integral step in decarbonizing the overall economy to combat climate change. In recent months, lawmakers on both sides of the aisle have proposed new tax credits for a wide range of clean electricity technologies through proposals such as Democratic Senator Ron Wyden’s Clean Energy for America Act and Republican Congressman Tom Reed’s Energy Sector Innovation Credit Act.

This document was released June 3, 2019.

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