I recently mentioned funding green-collar jobs programs that are authorized but not yet financed.

Another good way to stimulate the clean-energy economy fast with federal funding is through targeted tax incentives. In fact, Congress has already done so.

We already described the new tax benefit for employers of bike commuters. What other green stimulus went into the $700 billion economic stabilization package for the financial sector? I found summaries here, here, here, here, and here.


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  • Electric vehicles. An electric scooter like my heart’s desire, the Vectrix, is now eligible for a $2,500 federal tax credit. Sweet! That roughly covers the price differential between an all-electric and a gasoline-powered scooter. (But no, I still can’t afford one without an innovative conservation loan.) This tax credit rises with battery size and tops out at $7,500 for a plug-in hybrid like Rob Lowe’s or a battery-powered vehicle with a small gasoline-fueled recharging engine such as the Chevy Volt. This tax incentive phases out as the number of electric vehicles sold increases. Unlike the over-generous subsidies to corn-based ethanol, it’s not a permanent subsidy, but a boost to help electric vehicle manufacturers get production up high enough to achieve economies of scale.

    Rooftop solar panels. An existing tax credit for homeowners who install solar power systems is now much bigger. It used to be limited to $2,000. For the next eight years, it’s unlimited. Basically, if you put a solar electric system on your house, you get 30 percent of the price back on your federal income taxes.

    Ground-sourced heat pumps. Same deal as for solar.

    Home efficiency upgrades. Certain energy-saving purchases, such as high-efficiency water heaters, qualify for a tax credit to the purchaser. A matching tax credit goes to the manufacturers of efficient refrigerators and other home appliances.

    Tax credit for wind-power producers. Congress extended the producer tax credit for wind-power for one year. This credit is generous enough that wind-farm developers live and die by the annual Congressional fight over it. Congress struck it from the late-2007 energy bill (pdf), but they revived it in the economic stabilization act.

    Combined heat and power systems. Congress created a new tax credit worth 10 percent of the amount invested for cogeneration of heat and electricity. The credit expires in eight years.

    Smart Grid. Infusing information technology into the operation of the electric grid and electric-powered devices—so that generation, transmission, and consumption facilities and devices can “talk to each other” and adjust their performance to optimize the system’s overall efficiency—can save an abundance of money and energy. Congress gave tax benefits to businesses for using smart-grid devices, by allowing them an accounting privilege called accelerated depreciation.

    I’ll admit that I’m generally a little dubious about targeted tax credits like these ones. To me, the best tax policies are simple, universal, and unadulterated with special exemptions. But in a time for economic stimulus like we’re in now, targeted tax incentives are one good way to move money fast to boost new, job-creating clean-energy industries. Count me a fan of all these provisions Congress added to the stabilization act.