Climate Change Technology Initiative:
$4.0 Billion in Tax Incentives
February 3, 2000
The President is proposing a new $4.0 billion package in tax
incentives over five years to help reduce greenhouse gas emissions by
spurring the purchase of energy efficient products and the use of
renewable energy (see Table 2).
Table 2. CCTI Tax Incentives ($ in Millions)
FY 2001 FY01-05
Homes and Buildings
Provide tax credit for energy efficient building equipment -18 -201
Provide tax credit for new energy efficient homes -82 -633
Provide tax credit for solar energy systems -9 -132
Extend tax credit for electric and fuel cell vehicles and
provide tax credits for qualified hybrid vehicles 0 -2078
Extend tax credit for electricity produced from wind and
closed- loop biomass; provide credits for open-loop
biomass facilities and coal-biomass cofiring; and provide
credits for methane from certain landfills -91 -976
Provide 15-year recovery period for distributed power -1 -10
TOTAL** -201 -4030
**Total may not add due to rounding.
HOMES AND BUILDINGS
Tax credit to consumers who purchase new energy efficient homes.
To encourage the purchase of new energy efficient homes, consumers would
receive a tax credit of $1,000 for homes purchased from 2001-2003 that
use at least 30 percent less energy than the standard under the 1998
International Energy Conservation Code (IECC) and a credit of $2,000 for
homes purchased from 2001-2005 that use at least 50 percent less energy
than the IECC standard.
Tax credit for energy efficient equipment in new and existing homes
or buildings. This credit will encourage the purchase of electric heat
pump water heaters, natural gas heat pumps and fuel cells. The credit
would apply to both residential and commercial equipment. The credit
would be 20 percent of the cost of the investment, subject to a cap, for
equipment purchased from 2001-2004.
Tax credit for solar energy systems. A 15 percent tax credit will
encourage the purchase by consumers and businesses of solar energy
systems. The maximum credit would be $2,000 for rooftop photovoltaic
systems placed in service from 2001-2007 and $1,000 for solar water
heating systems placed in service from 2001-2005.
Tax credits for electric, fuel cell, and qualified hybrid vehicles.
Cars and light trucks (including minivans, sport utilities, and pickups)
currently account for 20 percent of greenhouse gas emissions. Tax
credits for electric, fuel cell, and hybrid vehicles will help to move
advanced technologies from the laboratory to the highway. These
technologies can significantly reduce emissions of carbon dioxide, the
most prevalent greenhouse gas.
Extend the current tax credit for electric vehicles and fuel
cell vehicles. Under current law, a 10 percent credit, up to
$4,000, is provided for the cost of qualified electric vehicles and
fuel cell vehicles. The credit begins to phase down in 2002 and
phases out in 2005. The President's proposal would extend the tax
credit at its $4,000 maximum level through 2006.
Tax credits for hybrid vehicles. The credit -- available for
all qualifying vehicles, including cars, minivans, sport utility
vehicles, and pickup trucks -- would range from $500 to $3,000 for
purchases of a qualified hybrid vehicle from 2003 through 2006,
depending upon the vehicle's design performance.
Tax credit for electricity produced from wind. Current law
encourages the production of electricity from wind, which emits no
greenhouse gases, through a tax credit of 1.5 cents per kilowatt hour
(adjusted for inflation after 1992). The current tax credit covers
facilities placed in service before January 1, 2002. The President
proposes a 2.5-year extension of this tax credit.
Tax credits for electricity produced from biomass. Biomass refers
to trees, crops and agricultural wastes used to produce power, fuels or
chemicals. This package of credits would:
Extend current "closed-loop" biomass credit. This proposal
extends for 2.5 years the current 1.5 cent per kilowatt hour tax
credit (adjusted for inflation after 1992), which covers facilities
placed in service before January 1, 2002.
Provide credits for "open loop" biomass facilities. This
proposal expands the definition of biomass eligible for the 1.5
cent tax credit to include certain forest-related resources and
agricultural and other sources for facilities placed in service
from 2001 through 2005, and provides a 1.0 cent credit for
electricity produced from 2001 through 2003 from facilities placed
in service prior to January 1, 2001.
Provide a credit for cofiring biomass and coal. This proposal
adds a 0.5 cent per kilowatt hour tax credit for electricity
produced by cofiring biomass in coal plants from 2001 through 2005.
Provide credit for methane from landfills. This proposal adds a
1.5 cent per kilowatt hour credit for electricity produced from
landfills not subject to EPA's 1996 New Source Performance
Standards/Emissions Guidelines (NSPS/EG) and 1.0 cent per kilowatt
hour for landfills subject to NSPS/EG. Qualified facilities would
be facilities placed in service after December 31, 2000 and before
January 1, 2006.
15-year recovery period for distributed power property. The
development of distributed power technologies has made it possible to
generate electricity locally at dispersed industrial, commercial, and
residential locations. Such technologies can be more energy efficient
and generate fewer greenhouse gases than conventional generation
methods. This proposal would simplify and rationalize the current
depreciation system by assigning a single 15-year recovery period to
distributed power property.