Building back better with clean energy tax credits
Newly passed legislation spotlights the unsung heroes of renewable energy
One of this year’s most highly anticipated pieces of legislation is a huge step closer to becoming a law — and it has big implications for clean energy. The Build Back Better Act passed the House of Representatives and is on track to become a game changer in the world of renewable energy. Critically, the legislation will extend clean energy tax credits through the decade. Tax incentives are a tried-and-true tool for growing clean energy and are responsible for a significant part of the widespread growth of clean energy we’ve seen over the past decade. When it comes to creating a future built on energy that doesn’t pollute or harm our planet, these credits are essential.
Clean energy tax credits = more renewable energy for Americans
Thanks in part to advocates championing clean energy tax credits for more than a decade, this indispensable financial support has been the driving force behind the rise of renewable energy and advocates. Credits enacted in the 2000s allowed wind energy to triple and solar to grow by 52% annually.
By making it more affordable for individuals and developers to pursue such new projects as rooftop solar or an offshore wind farm, clean energy tax credits help break down the barriers to going renewable. Under the new package, this incentive will only grow. In fact, the cost of rooftop solar will decrease by 30% thanks to this act, and the act shortens the payback for a solar project by about 5 years. This will open the door to more Americans making the decision to repower their lives with clean renewable energy right at home.
All this will also lead to clearer skies and more breathable air. The credits are expected to spur enough renewable energy development to slash the county’s 2005 greenhouse gas emissions in half by 2030. Lowering these emissions are so important because they warm the planet and are linked to health problems like asthma, heart attacks and cancer.
Why update and extend the credits?
As they stand now, many of the clean energy tax credits will be phased out in the near future. The Build Back Better legislation is so important to the tax credit program because it grants these incentives a 10-year extension, which ensures financial support for renewable energy for years to come. This long-term certainty will ease planning for states, companies and consumers as they consider how and when to invest in clean energy. A 10-year extension will also be 10 to 30 times more effective at cutting emissions by 2031 than a five-year extension would have been, so keeping that timeline intact as the bill moves through the Senate will be key.
The Build Back Better Act will also make the tax credits refundable, meaning that those who use the credits to pursue new renewable energy projects can receive the money in the form of a refund rather than as a tax credit. It’s a move that will expand renewable energy access to people and developers with lower tax income.
A key step towards 100% renewable
We have a nearly limitless supply of renewable energy, and we’ve only just begun to tap its potential. We now get more than 10% of our energy from sources like the sun and the wind, up from less than 1% in 2001. This new suite of credits will keep the wind in our sails (and our turbines) on the journey to a more livable climate as we transition to 100% renewable energy.
Environment America and our national network have been advocating for these sort of long-term clean energy tax incentives for almost a decade. This year alone, we met with more than 80 offices and urged many of them to support clean energy tax incentives. Our advocates have been quoted as far back as 2012 making the case for extending the credits, and our reports have consistently recommended federal tax programs to boost renewable energy. With support from members and our team of advocates, researchers and organizers across the country, we made a strong case and helped make this victory possible.
This moment is decades in the making. We celebrate the work of Congress as they have worked so tirelessly to craft and pass this momentous legislation that is poised to deliver big for the American people. Let’s work together to pass the Build Back Better Act through the Senate, and lock in a clean energy future for generations to come.