Consumers interested in purchasing environmentally friendly technologies—from solar panels to hybrid cars—have traditionally relied on their state governments for financial help via tax credits and rebates. But as pressure to diversify the country’s energy palette mounts as a result of tensions in the Middle East and elsewhere, even the Republicans in control of the White House and Congress are looking to help consumers jump on the renewable energy bandwagon.
Despite these nods to renewables, though, environmentalists are upset about the bill’s other proposed provisions, including more than $14 billion in tax incentives and subsidies for coal production, oil development and other environmentally harmful industries. “The industry is reaping huge profits from tax credits, yet there are no benefits to the public,” says Navin Nayak, an analyst at consumer advocates U.S. Public Interest Research Group (USPIRG). “It’s a waste of money.”
But without passage of the bill, the only federal help available on renewable energy projects is the Department of Energy’s Million Solar Roofs program, a Clinton-era initiative to install solar energy systems on one million U.S. commercial and residential buildings by 2010. Consumers can get financial and technical help from the federal government in adopting renewable energy technologies under the program’s guidelines.
Twenty-two states and territories come to the rescue with personal tax breaks for renewable energy projects, including Alabama, Arizona, Colorado, Georgia, Hawaii, Idaho, Kansas, Louisiana, Maryland, Massachusetts, Montana, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, Utah, West Virginia and Puerto Rico. Just two years ago, only 16 states offered any such incentives.
“Several states are pursuing renewable energy to capture the wide range of potential benefits,” says Barry Hopkins, policy analyst at the Council of State Governments. “Direct economic benefits include economic stimulation, job creation and increased revenue.”
Not surprisingly, California is still the leading light of the renewable energy movement. The state’s legislature passed a law in 2001 that provides homeowners and private businesses with tax credits for using solar energy (which includes wind) as an electricity source.
Homeowners and businesses that install solar panels or wind-driven generators get a 15 percent credit of the net cost of the system, which is the balance remaining after deducting any government incentives. For example, the California Solar Energy Industries” website shows that a residential solar project costing $24,000 would get $10,730 in rebates. For the 2001 tax year, about 1,600 Californians received $2.6 million in credits.
Net metering—selling excess electricity back into the power grid—is another way for consumers to save money. Two years ago, E reported that 23 states mandated some form of net metering. Today, 38 states and the District of Columbia permit it.
Giving Hybrids A Lift
There has never been a better time to ditch the traditional gas-powered automobile in favor of a hybrid or other clean-fuel vehicle. Owners of these new cars can get $2,000 or more back on their tax returns. The Internal Revenue Service now goes beyond natural gas and ethanol to consider hybrids (such as the Toyota Prius or Honda’s Civic Hybrid) to be “clean-fuel vehicles.”
The $2,000 deduction applies to hybrids purchased anytime after they were first introduced in 2001, and decreases by $500 each year until it is phased out. Additionally, 14 states offer some kind of hybrid incentives.
Americans are rekindling their interest in renewable power on a scale not seen since the oil shortages of the 1970s. But with the federal government so close to Big Oil, renewables are not expected to account for more than their current two percent of the American energy mix any time soon. “Renewable energy will not gain a sustainable foothold until the markets fully recognize, value and compensate these sources for air quality and other social benefits,” says David Wooley of the Renewable Energy Policy Project. Not holding their breath for the feds to take action, a majority of states are doing what they can to fast-forward these exciting new technologies.