What Kind Of Tax Incentives Are Out There For Buying Greener?

Dear EarthTalk: What tax or other government incentives are there out there for buying green—for individuals as well as businesses?

—Phoebe Rafferty, New York, NY

There has never been a better time than now to tap into a laundry list of tax rebates and other financial incentives designed to encourage individuals and businesses to go the greener mile. At the federal level in the U.S., individuals can reap the rewards of no less than eight different financial incentives ranging from tax credits and home loans for replacing windows and installing insulation around the house to tax rebates for purchasing a hybrid car or hooking up a solar hot water heater.

Besides these federal incentives, nearly every U.S. state has additional state or local incentives available. Many require utilities to rebate consumers who save electricity. Some utilities even offer “net metering,” whereby consumers who generate some of their power through rooftop solar panels or other technologies can sell electricity back to the utility, thus reducing or zeroing out their electric bill—even earning money.

Many financial incentives are in place for businesses, as well. At the federal level, examples include an energy-efficient commercial buildings tax deduction, a business energy reduction tax credit, an energy-efficient appliance tax credit for manufacturers, and a new energy-efficient tax credit for green-savvy builders.

At the state level, many are eager to attract renewable energy companies to their region, and offer tax breaks to get them there. Washington State, for example, charges no sales tax on renewable energy equipment produced or sold there. And some forward-thinking cities are beginning to offer “density bonuses” and green building incentives to developers and builders to encourage sustainable land use.

The best place to look for what’s available is to steer your web browser to the free online Database of State Incentives for Renewables and Efficiency (DSIRE), a comprehensive source of information on state, local, utility and federal incentives that promote renewable energy and energy efficiency. DSIRE is a federally funded project of the Interstate Renewable Energy Council, whose membership includes state and local government agencies, national laboratories, renewable energy companies and advocacy groups.

In Canada, the Office of Energy Efficiency at Natural Resources Canada offers a slate of federal grants and incentives under its ecoENERGY Retrofit program to homeowners, businesses, large industries and public institutions to help them invest in energy- and pollution-saving upgrades. The agency also administers the High Efficiency Home Heating System Cost Relief program, which will contribute up to $300 to homeowners who upgrade their old oil or gas furnace or boiler to a new high-efficiency model. And low-income households might qualify for additional federal financial assistance for energy retrofits. Another Canadian program, the Vehicle Efficiency Incentive (VEI) rewards those who buy fuel-efficient cars or trucks with rebates of up to $2,000 each. Beyond these federal programs, selected provincial and municipal entities across Canada also offer incentives to those looking to save energy and the environment.

CONTACTS: Database of State Incentives for Renewables and Efficiency (DSIRE); Natural Resources Canada ecoEnergy Retrofit Program.