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.