By Amy Harder

Costs for wind and solar electricity have dropped so much over the past decade that tax credits supporting them are a wildly affordable way to tackle climate change, a new study said.

The benefits from lower carbon emissions are roughly three to four times greater than the costs of clean-energy tax credits, according to a study by the University of Chicago’s Energy Policy Institute and the Rhodium Group, an independent research organization.

“This reflects the progress that has been made in reducing the cost of low-carbon energy sources,” said Michael Greenstone, economics professor at the University of Chicago and executive director of the institute.

The study analyzed production and investment tax credits available to new zero-emitting electricity generating resources available through 2031. It also examined a tax credit supporting existing nuclear power plants, which are often cheaper to keep running than building new power plants.

These provisions are similar to several tax credits included in the stalled, House-passed Build Back Better bill.

Greenstone, who prefers a carbon price over subsidies or mandates, said tax credits are filling an important role given Washington’s lack of interest in passing legislation to put a price on a carbon.

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Areas of Focus: Energy Markets
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Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Renewable Energy
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Renewable Energy
Lower technology costs and supportive public policies are driving an increase in renewable energy in markets around the world. EPIC research is assessing the costs, benefits, and efficiency of policies...
Climate Change
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Climate Change
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...
Climate Law & Policy
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Climate Law & Policy
As countries around the world implement policies to confront climate change, EPIC research is calculating which policies will have the most impact for the least cost.
Assessing the Costs and Benefits of Clean Electricity Tax Credits
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Assessing the Costs and Benefits of Clean Electricity Tax Credits
Tax credits to boost clean energy deployment are an important part of the climate provisions within the Build Back Better Act. EPIC and Rhodium Group measure the costs and benefits...