State Tax Incentives Stimulate Energy Efficient Investments

Many states are filling in the gap left from weak federal incentives for energy efficiency investment. States offer sales tax waivers or income tax credits for purchases of energy-efficient equipment, for example. The American Council for an Energy-Efficient Economy’s new report, Opportunities for State Action: Tax Credits for Energy Efficiency in the Private Sector, is a state-by-state analysis of tax incentives.

Stressing the diversity of state approaches, co-author Harvey Sachs commented, “States have shown remarkable savvy in tailoring programs to meet the needs of their citizens and businesses. These programs address everything from green buildings and alternative fuel vehicles to better appliances.” The report analyzes vehicle efficiency programs in Arizona, Maryland, and Oregon, and building-related programs in Hawaii, Idaho, Maryland, Massachusetts, New Jersey, New York, and Oregon.

The report also notes common features of effective state tax incentive programs. They stimulate market acceptance of advanced technologies by establishing appropriate criteria and allow enough time for credits to affect the market. The programs are flexible with respect to who receives the credits and complement other policy initiatives (state public benefit charges, federal, and municipal programs).

Opportunities for State Action: Tax Credits for Energy Efficiency in the Private Sector is available online: www.aceee.org/pubs/e021full.pdf