Economic analysis of tax-credit incentives for business investment in energy conservation and production
Some provisions of the 1978 Energy Tax Act and the 1980 Windfall Profits Tax Act offer temporary tax credits to businesses making qualified investments in energy capital. These tax credits are intended to provide incentives for energy conservation, new energy source development, and the substitution of other fuels for oil and gas. Qualifying investments include: specially defined energy property (principally waste heat recovery equipment), alternative energy property, cogeneration equipment, intercity buses, small hydroelectric facilities, solar and wind energy property, ocean thermal energy conversion equipment, equipment for producing natural gas from geopressurized brine, equipment for producing shale oil, and solid waste energy recovery equipment. Efforts to analyze the consequences of the above-mentioned tax credits are reviewed. Included are summaries of the various methodologies used for analysis and details of the estimated consequences of the tax credits. For each tax credit under examination that is applied to a well-established technology, the impact of the credit on the time paths of investment and energy saved, the net economic cost of the credit, the direct revenue cost of the credit to the Federal Treasury, and the external benefits per barrel of oil (or the energy equivalent of a barrel of oil) required to offset the net economic cost of the credit are estimated. For the established technologies, it was found that the tax credits brought about increased investments and savings in energy use. However, to offset the tax-credit-induced market distortions, the external benefits required per barrel of oil, with one exception, is in excess of seven 1979 dollars. For the emerging technologies examined, it is found that the present energy investment tax credits generally do not provide sufficient incentives because the costs of these technologies are too high.
- Research Organization:
- National Center for Analysis of Energy Systems, Upton, NY (USA)
- DOE Contract Number:
- AC02-76CH00016
- OSTI ID:
- 5328583
- Report Number(s):
- BNL-51526; ON: DE82018177
- Country of Publication:
- United States
- Language:
- English
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291000 -- Energy Planning & Policy-- Conservation
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32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320000* -- Energy Conservation
Consumption
& Utilization
BUSES
COGENERATION
DEUS
ECONOMIC ANALYSIS
ECONOMICS
ENERGY CONSERVATION
ENERGY SOURCE DEVELOPMENT
ENERGY SOURCES
ENERGY SYSTEMS
ENERGY TAX ACT
EQUIPMENT
FLUIDS
FOSSIL FUELS
FUEL GAS
FUEL SUBSTITUTION
FUELS
GAS FUELS
GASES
GEOPRESSURED SYSTEMS
GEOTHERMAL RESOURCES
HEAT RECOVERY EQUIPMENT
HYDROELECTRIC POWER PLANTS
INVESTMENT
LAWS
MACHINERY
MINERAL OILS
NATIONAL ENERGY ACT
NATURAL GAS
OCEAN THERMAL POWER PLANTS
OILS
ORGANIC COMPOUNDS
OTHER ORGANIC COMPOUNDS
POWER GENERATION
POWER PLANTS
RENEWABLE ENERGY SOURCES
RESOURCES
SHALE OIL
SOLAR EQUIPMENT
SOLAR POWER PLANTS
SOLID WASTES
STANDARDS
STEAM GENERATION
TAX CREDITS
TAXES
THERMAL POWER PLANTS
TRANSPORTATION SYSTEMS
TURBINES
TURBOMACHINERY
VEHICLES
WASTES
WIND TURBINES
WINDFALL PROFITS TAX