“I will confess I was always a little skeptical of the tax incentives.
“It’s very rare that we get opportunities to have policies with a benefit-to-cost ratio of 3 or 4 to 1.
Since then, that bill has been cut in two, renamed the Build Back Better Act, killed, resurrected, maybe killed again, and generally muddled over by Senator Joe Manchin of West Virginia and the rest of the Senate Democratic caucus.
As you may know, the United States already has a set of policies that could be described as “clean-energy tax credits,” a mishmash of tax breaks for solar panels, wind turbines, and geothermal systems. But they are overly specific and kind of a mess, written at different times by different legislators.
The credits also include a few other tweaks that will make it easier for normal utilities, and not independent power producers that sell electricity to the highest bidder, to use them.
At their peak, the incentives would eliminate 33 to 45 percent of carbon emissions from the country’s electricity sector, compared with a world without the policy, the analysis found.
The new policies will cost the public only $33 to $50 to prevent a ton of climate pollution from entering the atmosphere, which is well below economists’ median estimate of how much each ton of carbon pollution costs the economy.
That’s in large part due to the huge collapse in the price of solar and wind, John Larsen, another co-author of the study and a partner at the Rhodium Group, told me.
That places the clean-energy tax incentives at an unusual sweet spot: Although they’re normally explained as innovation policies, aimed at bringing down the cost of alternative and zero-carbon energy, they will also cheaply eliminate tons of carbon pollution.
“It’s cost effective, it gets a lot of tons, it gets at the sector that everyone says we have to get right the fastest—and we can do it without the tools everyone said we needed,” Larsen said.
In an email, Lynne Kiesling, an economist at the University of Colorado who was not involved in the study, agreed that the study found the tax credits may be cheaper than other policies.
Remarkably, the study may actually underestimate the public cost of the tax breaks, Larsen added, because he and his colleagues did not include an estimate of the money saved in medical bills from reducing conventional toxic air pollution.