Tax Credits: Our Take

Andy Johnson, Executive Director

With the potential phase-out of various tax credits, we’re often asked (or we offer) our perspective. Here it is, in brief.

  1. Renewable energy tax credits have worked: they have driven the scaling up of the industry, driven down costs, and driven market transformation and job creation, which to a large degree is what they’re meant to do.
  2. Tax credits are not an equitable approach to incentivizing a clean energy transition.
    Because they require significant income tax liability, they are not directly available to the over 40% of households categorized as lower-income (and who have the highest energy burden already), or to non-taxable entities such as local governments, schools, and nonprofit organizations.
  3. Renewable energy tax credits at the state and federal level should be continued, and they should be improved. They should be continued because the clean energy transition needs to accelerate to avoid worsening climate crisis and because fossil fuels continued to be subsidized at double the rate of the current clean energy tax credits. And they should be improved to function more equitably for all US energy consumers (including refundability and transferability, for starters).
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