Biden's Clean Energy Tax Credits Could Reduce 5B Tons of Carbon and Create $1.5T Economic Surplus
The fate of the climate and clean energy components of Build Back Better remain uncertain. But the merits of those legislative initiatives are becoming clearer. A new study indicates that clean energy tax credits "would be one of the most cost-effective climate policies in American history."
A new analysis from researchers at the University of Chicago and the Rhodium Group, an energy research firm, finds that "the policy's benefits will be three to four times larger than its costs, creating as much as projected $1.5 trillion in economic surplus while eliminating more than 5 billion tons of planet-warming carbon pollution through 2050."
Why It Matters
Over the last century, fossil fuels have been heavily subsidized while clean energy has fought for the crumbs remaining. Passing clean energy tax credits would be a boon to the industry and would accelerate progress. Clean energy today employs over 400,000 workers; these tax credits could grow that number significantly over the next few years by guaranteeing the ability of projects in the pipeline.
As American Clean Power CEO Heather Zichal said, "With tax credits for renewable generation, energy storage, transmission projects, green hydrogen and the growing offshore wind energy sector and associated domestic manufacturing,a powerful signal is being sent to the private sector and industry."
What's Different About These New Tax Credits?
Historically, clean energy has fought for individual tax credits targeted at specific industries whether solar, wind, biomass, or other technologies. Some conservatives opposed this approach, saying it has "picked winners and losers." But the real weakness is that policies for tax credits were constraining.
The new tax credits are technology-neutral, allowing developers to use them when producing or investing in any kind of zero-carbon electricity. More importantly, the new proposal is fully refundable, meaning the risk is greatly reduced. The industry would be able to receive what's called "direct pay," -- which will help get "stalled projects off the ground and people back to work." And, these credits are popular and broadly supported in the House and Senate.
WW0: Heather Zichal and Amanda Little Facebook Live conversation broadcast on 2/18/2021.