Not So Stimulating
I'm not an economist, but I know the basics: Lower the price and people will buy more. It's true for every industry: From the proverbial widgets of freshman economics class to flat-screen TVs and tomatoes -- and renewable energy. So, if we want to make people buy renewable energy, shouldn't we make it cheaper for them to buy it? Apparently, the Senate fell asleep during Economics 101. Last Wednesday, the Senate rejected a stimulus package that included $5.7 billion in tax incentives for (among other things) the installation of energy-efficient appliances and building improvements. The package would have given tax breaks to wind-farm developers, appliance manufacturers and businesses that install fuel cells. The Sierra Club reports that this is the third time in only seven months that the Republican leadership has blocked a package of clean-energy tax incentives.
The sad thing is, this should have been a no-brainer. For one thing, the breaks were signed into law years ago. Unfortunately, they are set to expire at the end of the year. The stimulus package provided an easy vote for a short-term fix to extend the tax breaks while Congress works out a long-term solution. Moreover, these breaks should have been an easy political win. As Scott Segal, an energy lobbyist in Washington told the LA Times, these are one of the few things that both the Sierra Club and industry can rally behind. The IPCC was just given a Nobel prize for finding that climate change is "unequivocal." NASA just declared that 2007 can claim the dubious honor of tying for the second warmest year since the start of the Industrial Revolution. Shouldn't we be doing whatever we can to encourage the use of low and no-carbon technology?
As Gristmill reported last week, "These tax credits are good economics and good climate policy." That's clear to me. In fact, it should be clear to any student in freshman economics. It's a real shame that it wasn't clear to the U.S. Senate.
