Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
225358405
label
Tax Cuts/Credits GCC [Global Climate Change]
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
225358405
contentType
document
title
Tax Cuts/Credits GCC [Global Climate Change]
citationUrl
collections
Records of the Council of Economic Advisers (Clinton Administration)
Jeffrey Frankel's Files
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
225358405
levelOfDescription
fileUnit
otherTitles
42-t-4739346-20171095F-009-001-2019
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
ee56904adeb8040f
ocrText
FOIA Number: 2017-1095-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council of Economic Advisers
Series/Staff Member:
Jeffrey Frankel
Subseries:
OA/ID Number:
13726
FolderID:
Folder Title:
Tax Cuts/Credits GCC [Global Climate Change]
Stack:
Row:
Section:
Shelf:
Position:
S
20
5
1
1
EXECUTIVE OFFICE OF THE PRESIDENT
CC:
JY
COUNCIL OF ECONOMIC ADVISERS
JA
WASHINGTON, D.C. 20500
SR
MEMBER
November 20, 1998
QP
MEMORANDUM FOR TODD STERN
cong
FROM:
JEFF FRANKEL IF
SUBJECT:
A NEW IDEA HOW TO DO SOMETHING IN THE AUTO
SECTOR
I know that you have run into some roadblocks on the proposal for tax credits for
fuel-efficient cars. You might be in the market for "outside the box" suggestions for how
to do something in the auto sector. So I thought I would offer one.
The Administration could announce a regular series of cash awards for anyone
making an outstanding contribution to reducing GHG emissions in the auto sector. It
could be annual, like the Baldridge Awards, or more frequent. Recipients could include
large corporations, private research labs, national labs, individuals (e.g., authors or
inventors), think-tanks, NGOs, and local governments.
Hypothetical examples:
Innovations in the vehicle:
- redesigned engines that increase efficiency such as direct injection
- light-weight materials
- improved power source such as fuel cells
Innovations in fuels:
- improved refining methods that lower costs of reducing sulfur
- improved natural gas or other alternative fuels
Innovation in systems:
- switch of corporate/government fleets
- systems of delivering alternative fuels
Innovations in infrastructure:
- improved traffic monitoring and information to reduce congestion
- automated tolls systems
I have discussed this with other members of the economists team (though not at the
senior level), and they are enthusiastic about the idea.
cc: David Wilcox, Bob Cumby, Mark Mazur, Victoria Greenfield
a: files
Conques
SK mg
4:30
To: Janet Yellen, Jeff Frankel
From: Steve Polasky
RE: Auto Tax Credit
November 6, 1998
The idea of proposing a technology credit for automobiles to include in the Administration's 2000
budget is being seriously considered. The issue may go to principals as early as the week of
November 9.
Background.
On November 2, Sally Katzen convened a meeting to discuss possible tax credits for fuel efficient
vehicles to be included in the Administration's budget proposal for 2000. The performance-based
tax credit in the 1999 Administration budget proposal died, largely because of lack of support
from the Big 3 domestic producers. Transportation is a large sector with no climate change
initiative at present. There is a strong desire within the Administration to put together an
initiative that will be acceptable to the Big 3 and the environmental community.
Performance-Based or Technology-Based Tax Credit
The domestic producers favor a technology-based tax credit. The performance-based approach
would give a tax credit for vehicles that were twice (2X) or three times (3X) as efficient as the
average vehicle in its class. The auto companies feel that the 2X or 3X standard is too demanding
and unlikely to be reached in the time frame proposed. In addition, they think there are problems
with definition of vehicle classes. Another concern of the domestic producers may be the
competitive advantage that a performance-based tax credit might give to foreign producers. The
domestic producer's view is that if the introduction of new technology is the major policy goal,
then a technology-based tax credit is the corfect approach.
Treasury and environmental groups have argued for a performance-based approach. There is the
standard criticism that a technology-based approach forces the government into the position of
trying to pick winners. There is also the concern that without a performance standard, there may
be no environmental gain from the tax credit. The fear is that the auto companies will include the
technology but then offset this by building "bigger, faster, stronger" vehicles leaving average fuel
efficiency largely unchanged. In particular, if CAFE constraints are binding, installing the
technology on some vehicles allows a company to sell more large fuel inefficient vehicles, leaving
fuel efficiency of the company's fleet at the CAFE constraint level. Even without a binding
constraint, some improvement in technology will likely go toward performance enhancement
(bigger, faster, stronger) rather than fuel efficiency.
In reality, both the technology and the performance standards are subject to this criticism. Under
a performance standard, increasing the proportion of vehicles in the large fuel-inefficient
categories can allow a company to improve fuel efficiency of particular vehicles while still keeping
overall fuel efficiency constant.
Proposed Tier II Rules on Tailpipe Emissions
A technology favored by the domestic producers is CIDI (compression ignition direct injection),
which uses diesel fuel. Using current high sulfur diesel fuel would generate high levels of NOx
and particulate matter emissions. Even with low sulfur fuel, diesel technology generates higher
emissions of NOx and particulates than gasoline engines.
The EPA is in the process of drafting new emissions standards for vehicles (Tier II standards). It
is not clear that rewarding CIDI with a tax credit will be consistent with Tier II rules or will be
acceptable to environmentalists. There is some tension between meeting NAAQS for ozone and
PM and lowering carbon emissions.
Summary
There is no guarantee that a tax credit, either based on performance within a defined class or
based on technology, will yield fuel efficiency or other gains. I am somewhat skeptical of the
merits of pushing for a tax credit unless it could be based on a pure performance standard
(without reference to classes), which seems to be a non-starter politically. Even so, the costs of
the program are not likely to be large. If a proposal comes forward that can manage the difficult
task of satisfying the various constituent groups, my inclination would be to try to insure that
desirable outcomes are advanced with the tax credit rather than opposing it altogether.
2 Garliner
6/1/98
(1)
CCT1
non in methodolay 133
fruit of results why ? we're consenative.
6381
(2)
Dolo
AEU % 1792 Baselive
1350
442
-132
1.25
1660
135 at $25/70
92 $
EC
CLIMATE CHANGE AND THE BUDGET
October 16, 1997
QUESTION 1: DO WE PROPOSE A REVENUE-NEUTRAL SET OF TAX CUTS ON
CLIMATE CHANGE?
There is much interest in a package of tax cuts in the near term to spur energy efficiency
and lower-carbon technologies. But there are two critical questions about such a tax package:
An overall strategic question, given the budget agreement, is whether we want to offer tax
cuts in any area. A potential danger with proposing climate change tax cuts is that we
could open up a bidding war over tax cuts generally. But it may be possible for us to
draw an important distinction between gross and net tax cuts -- that we support only
revenue-neutral tax plans.
A specific question, if we decide to offer a tax cut package, is how best to design the
package. Treasury tax policy staff are working with DOE, EPA, OMB, and other
agencies to put together a package of tax cuts amounting to perhaps $1.5 billion per year.
Some of the preliminary ideas include:
Tax subsidies to convert coal-fired power plants to gas;
Extension of the existing tax incentive for wind and "closed loop" biomass energy;
Tax credits for purchases of "superstar" energy-efficient devices and fuel-efficient cars;
Investment credits for energy-efficient buildings; and
An expanded research tax credit for energy-efficiency research.
P wants yo annource wel
C.S.
They'reall
Tax cut pachage T R&D Packoql
Rubin commy temble tax policy. Doesn't mean we shaldn't do iy-
QUESTION 2: DO WE SPECIFY A FUNDING LEVEL FOR R&D/TECHNOLOGY?
There seems to be unanimous support for an aggressive Federal technology and R&D
effort on climate change. The Department of Energy's 5-Labs study, the Department of Energy's
11-Nation Labs draft study, and the recent report from the President's Committee of Advisors on
Science and Technology (PCAST) have all studied potential technologies that could help to
reduce the cost of carbon emissions reductions.
One proposal that has been put together by DOE, with assistance from OMB and other
agencies, would include an additional $500 million per year starting in FY 1999, and ramping up
to an additional $1 billion by FY 2003. The effort would focus on promising areas including:
Energy efficient equipment (e.g., a public service campaign to attract attention to the
"Energy Star" label);
21st Century Housing (streamline federal, state, and local building and utility regulations
in ways that encourage innovation in construction);
Expanded Partnership for the Next Generation Vehicle (expand work on the next
generation vehicle technologies including fuel cells; and expand PNGV to include light
trucks/sport-utility vehicles);
PNGV for Heavy Trucks (partnership with engine manufacturers to double the efficiency
of heavy-duty trucks for civilian and military applications);
Industries of the Future (enhance industry/government research partnerships in areas such
as chemicals, aluminum, forest products and steel manufacturing technologies); and
Renewables R&D (expand research partnerships in key renewable technologies such as
wind, photovoltaics, geothermal, biomass and hydropower to accelerate cost reductions).
10/14/97 TUE 12:27 FAX
002
DRAFT
A U.S. Strategy to Reduce Carbon Emissions:
Technology Research, Development and Deployment
A national commitment to energy technologies will ensure that the U.S. can reduce and stabilize carbon
emissions while maintaining a robust and healthy economy. The U.S. strategy is designed to make this goal a
reality through a four part plan: 1) technology research, development and deployment (RD&D) to develop
new technologies and increase the use of the best of what is available today; 2) federal tax incentives to spur
technology development; 3) statutory and regulatory reform to advance technology innovation and
deployment in markets; and 4) actions to accelerate the use of these technologies in federal facilities and
vehicles.
The technology RD&D clement involves public-private partnerships and deployment initiatives. These
actions require additional federal technology funding of $500 million in FY1999 - rising to $1 billion in
FY2003. If successful, these actions could help reduce emissions by more than 175 MMT by 2010 and even
more in later years. The specific actions are summarized below.
Energy Efficient Building Equipment: Use of more cfficient equipment will be accelerated through
expanded "Energy Star" labeling, accelerated equipment cfficiency standards and other means.
Increased RD&D partnerships will cut costs and develop new technologies.
21" Century Housing: Partnerships with builders, suppliers, insurers, state and local governments,
and federal regulators will lead to construction of more efficient, attractive and affordable housing.
Expanded Partnership for the Next Generation Vehicle (PNGV): Increased funding of PNGV will
better ensure the development of an 80 mpg mid-size car by 2005. A PNGV light trucks/sport-utility
vehicle will also be developed.
PNGV for Heavy Trucks: A partnership with engine manufacturers will double the efficiency of
heavy-duty trucks for civilian and military applications.
Advanced Aircraft: Advanced aircraft technologies and air traffic control practices will produce a
35% reduction in greenhouse gases per passenger miles traveled by 2020.
Biofuels: Accelerated RD&D on energy crops, harvesting and fuel conversion processes will
significantly expand use of biomass fuels for automobiles and other vehicles.
Combined Heat and Power: Accelerated development of advanced turbines, fuel cells and other
technologies along with streamlined permitting and other statutory and regulatory reforms will
greatly accelerate use of highly efficient combined heat and power systems in industry.
Industries of the Future: Enhanced industry/government research partnerships in energy intensive
industries such as chemicals, aluminum, forcst products and steel will produce technologies that cut
emissions while improving productivity.
Efficient Motors and Production Systems: Accelerated use of market-ready electric motor systems,
steam systems and compressed air storage will improve efficiency, cut emissions and boost
productivity across industry.
Renewable Energy RD&D: Expanded rescarch partnerships in kcy renewable technologies such as
wind, photovoltaics, geothermal, biomass and hydropower will accelerate cost reductions and
10/14/97 TUE 12:27 FAX
003
DRAFT
performance improvements. Coordinated demonstrations and other deployment actions will lay the
foundation for the widespread use of these zero-carbon technologies.
Advanced Fossil Energy RD&D: Accelerated RD&D will enable use of coal and natural gas in
highly efficient, low-emissions power plants.
Carbon Sequestration Technology RD&D: Research, development and demonstration of advanced
sequestration technologies that could enable the continued use of high-carbon fuels such as coal.
Advanced Nuclear Power R&D: Research and development of a proliferation-resistant, low waste
reactor will allow zero-carbon nuclear power to bc a option for the future.
Basic Energy Research: Research in materials, chemicals, biotechnology, geophysics, advanced
computation, environmental and ecological sciences will establish the scientific foundation for
revolutionary advances in technology necessary for substantial emissions reductions in the long term.
10/14/97 TUE 12:28 FAX
004
DRAFI
Comparision of PCAST Recommendations and Draft White House Climate
Technology Strategy
Draft Strategy Budget (above FY98R)
PCAST
Recommended
Recommended
Incremental Budget
Budget Increment
Increment (v.FY98R)
$500M FY99 Level
$500M FY99 Level
FY99
FY03
FY99
FY03
FY99
FY03
Buildings Efficiency
49
164
85
210
55
155
Building system design and operation
5
51
5
45
Building equipment and materials
20
74
45
140
25
70
Codes and standards
4
4
5
10
5
5
Cross-cutting activities
20
35
35
60
20
35
Industrial Efficiency
44
129
65
145
55
135
Industries of the future
9
54
20
60
20
60
Cross-cutting activities
32
62
30
60
25
8
Technology access
3
13
15
25
10
15
Transportation Efficiency
65
130
140
260
115
140
PNGV & II)
46
71
100
160
80
100
Advanced heavy vehicles
12
42
40
100
35
40
Advanced materials
4
14
Technology deployment
3
3
Fossil Energy (riet Including reductions)
33
87
50
100
50
110
Coal power
-5
-2
15
20
Coal fuels
-7
0
Gas power
14
-8
15
25
Oil and gas production and processing
9
36
Carbon sequestration
8
20
50
100
20
50
Methane hydrates
5
12
-10
Hydrogen production from fossil fuels
1
7
Collaborative International R&D
1
6
5
Management, env. Restor., coop. R&D, et.
7
16
Nuclear
45
176
0
0
30
70
Life extension
-15
-15
Profiferation-resistant reactors
50
103
30
70
Advanced light water reactors
-15
-15
Fusion
25
103
Renewable Energy
130
307
145
245
120
300
Biomass fuels
20
61
25
55
Blomase power
25
55
Geothermal
12
22
Hydrogen
1
2
Hydropower
3
11
Photovoltaics
28
63
Solar Thermal
12
27
Wind
10
27
Systems and storage, transmission
5
12
Solar buildings
2
5
International assistance
4
7
Resource assessment and analysis
5
6
Management, analysis, REPI, other
5
9
Basic Energy Research
n/a
n/a
0
0
35
50
TOTAL, TECHNOLOGY ELEMENTS
366
993
485
960
460
960
Non-PCAST Items:
40
40
40
o
40
40
PNGV tax incentives
Renewable energy tax Incentives
Industrial technology tax incentives
Biofuels tax incentives
Agriculture and forestry R&D
40
Advanced aircraft R&D
40
40
40
40
TOTAL ALL ELEMENTS
406
1033
525
960
500
1000
Recommended Changes to White House Draft Climate Strategy at the $500 million level:
1) Additional funding is provided for advanced natural gas and coal generation technology R&D.
2) Additional funding is provided for advanced proliferation-resistent nuclear generation technology R&D.
3) Buildings and transportation R&D are reduced slightly to make room for fossil and nuclear increases.
4) Additional funding is provided for cross-cutting R&D (e.g., industrial sensors and controls).
5) Renewable energy R&D is lowered slightly to be consistent with PCAST:
6) An Increment for climate related basic energy research is added.
GCC Tax credits
11/21/97
Varl 5
Thease
her
They 1104
any
Karl
Joe Ene
Gerardi
Scholz
Rom relever
DOE
Mark
USTP
jeremy
Dave
9
Adels we Minank Henry relly Mark
Siw Bd
noniger
0571 M
Twillo
$ 1475hboll for carbon -savg techn.
$54 world Split 50-50 Tax - spdq? -1} but discuctionaly caps Tyles.
VP : want mde(Than $2/21 on MY )
$31 5 over Syrs. oxtax
(2½ on SP.
Bldgs.
Hure ruly.
Transp
Me car classes
under Doniger CAFE Styl no, nYhT?
me cav't lot and 105. COUNT cockited as
Travsit & vantool beuefit
Industy
Renevalle
Energy
Total
2.9
Gap
0.6
Henny Kelly
12/21/17
Treas 104
TAX CREDIT FOR SUPER EFFICIENT HOMES
Option:
Credit to persons who buy a home that uses 50% less energy than the model energy code.
The tax credit would be for the purchase of a primary residence of 1% of the cost of a
home, with a maximum credit of $2000. The credit would phase out or the goal changed
in 2005.
Verification:
The tax credit would not come into effect until 1999. During the 1998 fiscal year, the
National Institute of Standards and Technology (NIST) will work with industry, the
Department of Energy and EPA to develop testing and verification procedures for these
homes. NIST will use as it's baseline two existing items:(i) the International
Measurement and Verification Protocol that has been sponsored by DOE, and (ii) lessons
learned from the EPA energy star buildings program. The mechanism for verification
will also be developed through existing DOE and EPA programs. NIST will complete
the process in 6 months. This work will be closely coordinated with new efforts by
major home insurance companies to rate the quality of new housing and housing
components.
Analysis:
About 1.5 millions housing units are built each year for a total value of $128 billion.
Three quarters of the new units are single units and of these about a third are mobile
homes (or "manufactured housing"), most of which are never moved after installation.
Current estimates suggest that with a $2000/unit tax credit in place and a major national
program aimed at advertising the benefits of energy efficiency, about 2% of all new
homes could meet the goal of the tax credit (50% below model code level) in 1999 rising
to 10% by 2005. This would imply tax expenditures of $60 million in FY99 rising to
$300 million in FY2005 when the program would end or be redefined.
Benefit and Opportunity:
Residential housing offers one of the largest sources of low-cost carbon savings
available. Residences are responsible for 1/6 of all US greenhouse gases and
technologies are available to cut this production in half at very low cost given adequate
investment in innovation. Programs aimed at efficient appliances for retrofit will have
the largest near-term impact on production of greenhouse gases but over the long term,
innovation in the way houses are designed and built are essential to capture the potential.
The potential of advanced housing components is often lost when they are installed in a
poorly engineered structure.
Climate change tax credits are not adequate to serve as a surrogate for a carbon
trading mechanism. Carefully targeted, however, they can serve to spur innovation in
directions that can change construction practices in ways that would result in large gains
in energy efficiency as well as other benefits. Such targeted efforts are particularly
important for home construction because the industry has traditionally had difficulty
investing in innovation because of the way it has traditionally been regulated. The credits
would give builders a way to reduce the risk of innovation and give them an important
marketing tool. The credit would provide a highly visible, reliable indicator of quality
(something difficult to achieve in a fragmented market), and would allow builders to
recover development costs without raising initial home prices for the purchaser. Once
R&D costs are recovered, the builders should be able to build units at costs below the
costs of conventional construction.
The effort can be accelerated by working closely with insurance firms and financial
institutions. Many of the energy efficiency improvements also improve the durability
and disaster resistance of the home. The insurance industry is particularly interested in
helping develop measurement and verification protocols for residential structures, and
can be a partner in spurring innovation. This tax credit, and the work needed to develop a
reliable measurement tool, will leverage private sector investment and encourage them to
play a more active role in helping to improve the quality of housing while keeping
homes affordable.
Assumptions:
credits would be given to individual home buyers
credits would be available for specific housing products from builders whose
products had been given the needed rating.
ratings would apply to the heating, cooling, ventilation, hot water, and major
appliances commonly purchased with the home. They would not apply to
appliances, such as television sets, purchased separately by homeowners.
metrics would be developed for each major climate region.
the tax credit would be given only for energy efficiency. The labeling and rating
may well be developed in cooperation with insurance companies able to provide
insurance rate benefits in addition to the tax credit
the ratings would be an extension of the EPA energy-star rating. The EPA label
would apply to a large class of new housing, the proposed credit would be given
only to a small fraction of exceptional new housing.
the ratings would need to be based in part on a construction method which
ensured that each unit would meet the standard and would not require
sophisticated inspections of each structure built.
Alternative 1: High Threshold
This option would provide $4,000 credits to 25,000 units per year for a total annual
federal cost of $100M/year. This would allow each of five builders to construct 5,000
units.
Pros: Higher incentive would attract higher interest and keener competition.
Development costs could be written off against smaller total sales volume.
Cons: Fewer builders would be affected (1.7% of total market). Could attract high-cost
options. Credit still only 3% of value of average home
Alternative 2: Low Threshold
This option would provide $1,000 credits to 100,000 units.
Pros: Incentives provided to larger number of builders and homeowners. 7% of all new
homes would get the credit.
Cons: Could dilute credit and not provide adequate incentives to individual builders.
Could be used simply to finance additional insulation or other measures and not induce a
transformation in construction methods.
Alternative 3: State or Community Management
The tax credits could be given to states or communities who would compete for the right
to grant the credit much as empowerment zones were given specified tax exemption
rights.
Pros: This would allow competition on local regulatory streamline proposals as well as
competition on the methods proposed for use in rating the structures. It could encourage
communities to participate in PATH experiments
Cons: Could add complexity and management problems for Treasury.
Table 1
U.S. Home Construction
1990
1993
1994
1995
1996
Units (thousands)
Total
1,193
1,264
1,457
1,345
1,477
1-unit
895
1,1256
1,198
1,076
1,161
Mobile Homes
243
286
311
364
2-unit
16.1
11.1
14.8
14.3
16.4
3 and 4 unit
21.4
18.3
20.2
19.4
28.8
5 units and more
260
133
224
244.1
270.8
Millions of Current Dollars
Residential buildings
182,856
210,455
238,874
236,597
246,899
New housing units
127,987
144,071
167,919
162,898
176,378
1 unit
108,737
133,282
153,838
145,009
156,510
2 or more units
19,250
10,788
14,081
17,889
19,868
Improvements
54,869
66,384
70,955
73,699
N/A
SOURCE: BUREAU OF THE CENSUS
Vall 5 12/21
That " ' 04
Preliminary
Preliminary
revenue cost:
revenue cost
1999-2003
per ton of
KS
Option
($ billions)
carbon avoided
Comments
BUILDINGS
This
1.
Energy efficient building equipment. A 20
0.5
10 -20
Complements initiative to attract attention to energy star
Urp
percent tax credit for the purchase of certain
labels. Barriers to these investments (information, financing)
highly efficient equipment for residential and
addressed through other programs. May be inefficient because
commercial buildings, such as electric heat
the government is picking the technology winners. Subsidies
pump water heaters, fuel cells for power
may be supporting technologies that turn out to be losers and
generation, natural gas heat pumps and
may crowd out other potentially more energy efficient
electric heat pumps. Credit expires 2003.
technologies.
2.
Energy efficient homes. A tax credit
0.5 (if given to
N.A.
Would encourage the purchase of new energy efficient houses.
($1,000) would be provided for the purchase
all energy star
The proposal does not address the largest housing related
of highly energy efficient new homes. Credit
homes)
energy problem - old homes are inefficient." This proposal
expires 2003.
would be difficult to administer as there presently is no federal
program that certifies highly energy efficient new homes.
Absent a high standard for energy efficiency, the credit would
be largely a windfall.
TRANSPORTATION
3.
Fuel efficient vehicles. A $4,000 tax credit
0.2
110 900
Supports commercialization of vehicles under development in
for the purchase of high fuel economy
the Partnership for a New Generation of Vehicles. Most
vehicles with 3 times the 1997 class average,
eligible vehicles may be foreign and purchased by high-income
and $2,000 for vehicles achieving twice the
persons.
1997 class average. Credit phases down
beginning in 2003 and phases out in 2011 for
3x vehicles (2003/2006 for 2x vehicles).
4.
Transit and vanpool benefits. The tax
0.1
145
Allows employers to provide tax free transit and vanpool
treatment of parking, transit, and vanpool
benefits in lieu of compensation, a preference now available to
benefits would be equalized by allowing
parking benefits. Expands the difference in tax treatment of
employers to offer employees transit and
different forms of compensation.
vanpool benefits in lieu of compensation.
4a
Raise the transit pass/vanpool limit to
parking limit
INDUSTRY
5.
Combined heat and power systems. A 10%
0.6
100
Could accelerate the adoption of this well-established
tax credit for investments in combined heat
technology. The definition of eligible equipment would have
and power systems. Credit expires in 2003.
to be refined, particularly in view of past history of problems
in defining cogeneration. Installation of this equipment is
already economic in many situations; the credit may merely
provide a windfall for those already willing and able to install
this equipment.
RENEWABLE ENERGY
6.
Electricity production from wind and
0.2
430
Supports commitment to renewables. Limited emissions
biomass. Extension of the present 1.5 cents
reduction potential since wind power is limited geographically
per kWh tax credit for electricity production
and is not continuously available.
from wind and biomass for 5 years (i.e.,
production from facilities placed in service
before July 1, 2004).
7.
Rooftop solar systems. A 15 percent credit
0.1
200 - 300
Helps to implement the President's Million Solar Roofs
for the purchase of rooftop solar systems.
initiative. Will be purchased primarily by high-income
Maximum credit would be $1,000 for
households.
thermal and $2000 for photovoltaic systems.
Excludes hot water heaters for swimming
pools. Credit expires 2003.
8.
Methane recovery. A production tax credit
0.7
15 50
Would reduce emissions of methane, a potent greenhouse gas.
for electricity or energy produced from
Administration opposed extension of the section 29 credit.
qualifying methane sources, such as certain
landfills and coal mines. Restricted to third-
party sales. The credit rate would be $1.10
per mil. Btu. Credit expires 2003.
TOTAL
2.9
To make up the gap:
A.
Add items to option 1 (energy efficient
building equipment)
B.
10% credit for PFC recycling equipment
under 5
Would reduce emissions of PFCs in the semiconductor
installed in semiconductor fabrication
industry. May be difficult to justify such a narrowly targeted
facilities.
credit.
C.
10% credit for certain leaky electric power
under 5
Would reduce emissions of sulfur hexafloride. Difficult to
equipment (dual pressure power circuit
monitor the destruction of old equipment. If old equipment is
breakers manufactured before 1986)
resold, emissions reductions may not be attained.
D.
30% investment credit for small wind
Negligible effect on greenhouse gas emissions. Unnecessary
turbines (up to 40 kW). Credit phases down
*
230
subsidy for a growing industry industry projects annual
in 2006 and out in 2008.
growth of 18% without the subsidy.
N.A. means not available.
* means less than $50 million.
December 19, 1997