ACEEE PRESS BRIEF
ACEEE Study on Energy Efficiency
Tax Incentives Shows Strong Benefits
Contacts: Patrick Quinlan
or Steve Nadel of ACEEE at (202)
429-8873
FOR IMMEDIATE RELEASE
November 6, 2001
WASHINGTON, D.C. -- The American Council for an Energy-Efficient
Economy (ACEEE) has released a study demonstrating that a federal
incentive program composed of $7.3 billion in tax credits for 12
energy efficiency measures would provide economic savings of approximately
$190 billion, resulting in benefits 30 times greater than costs
to the federal treasury. Tax Incentives for Innovative Energy-Efficient
Technologies (Updated) examines the near- and long-term economic
and energy-savings benefits to be achieved through the use of tax
credits for selected energy efficiency measures under consideration
by the U.S. Congress this year. In addition, the study estimates
a total energy savings of approximately 70 Quads are expected from
advanced technology equipment installed by 2020 (the United States
used about 100 Quads in 2000).
The tax credit program in the ACEEE study makes the best use of
lessons learned from past programs. These tax credits target advanced
technologies that are most likely to show a good return on federal
investments. By "priming the pump" of technological progress,
these tax credits foster real changes in consumer choice, product
cost, and market competitiveness, providing a powerful market stimulant
for these new technologies. "The package of 12 tax incentives
yields a 2.3 to 1 benefit-cost ratio overall, a net benefit of $110
billion to the nation, and 9.6 million Btus of energy savings per
dollar of federal investment. These are compelling reasons to pursue
credits this year," said Patrick Quinlan, lead author of the
report and ACEEE's National Energy Policy Director.
"The energy conservation tax credits of the 1970s went to
well-known and widely used technologies, resulting in a high proportion
of 'free-riders' and limited net benefits," added Steven Nadel,
a co-author of the report and ACEEE's Executive Director. "The
proposed new tax credits for advanced technologies will spur investments
that would not otherwise take place. Once these technologies become
common, the tax credits should be discontinued."
The technologies reviewed in the study are: combined heat and power
systems; energy-efficient commercial building technologies; energy-efficient
new home technologies; heat pump water heaters; fuel cell cogeneration
systems; natural gas-fueled heat pumps; energy-efficient electrical
distribution transformers; hybrid motor vehicles; energy-efficient
natural gas furnaces; energy-efficient air conditioning and heat
pump systems; energy-efficient washers and refrigerators; and electric
and fuel cell vehicles.
The following table summarizes ACEEE's estimates of the energy
savings, federal costs, energy savings per federal dollar, net benefits,
and overall benefit-cost ratio (including both federal and consumer
costs) for each of the specific tax credits recommended.
The report provides an excellent and timely overview of the energy
efficiency tax credits currently being considered by federal policy-makers.
A concise description-including historical context, expected participation,
costs, and other details-is given for each of the 12 measures.
The full report, called Tax
Incentives for Innovative Energy-Efficient Technologies (Update),
by Patrick Quinlan, Howard Geller, and Steven Nadel, and the Executive
Summary are available in PDF by clicking on the links above.
Please also check out the new related report, called Federal
Tax Strategies to Encourage the Adoption of Combined Heat and Power.
