Time to scale back renewable energy incentives for the wealthy?

As Washington debates tax breaks for the wealthy, the renewable energy community should look for lessons

Last week President Obama and the democrats began to challenge the Republicans over eliminating tax breaks for the wealthy by letting tax breaks for families that earn more than $250,000 expire at the end of this year.  Two percent of families earn over $250,000 a year which accounts for 24% of all income earned, according to the Center for Tax Policy.

Within the renewable energy community, there is scarcely any debate about whether individual incentives for renewable energy systems should be reduced or eliminated for families over $250,000 – or even over $500,000.  It is unclear how much data exists from renewable energy programs about income levels of participants of incentive programs, and even less is understood about how many wealthy families would install renewable systems without an incentive.

Not everyone is ignoring the social justice implications of regressive renewable energy incentive policies: The Florida NAACP chapter has opposed utility “payments of subsidies by the general customer base to the more affluent customers who can afford the capital outlay for conservation programs” like solar panels.  Even Florida Power and Light recognizes that that wealthier people tend to use rebates for energy-saving products more than poor people, who may not be able to afford solar water heaters and other devices. “Since all utility customers pay for those rebates, it forces the poor to subsidize the wealthy,” said the NAACP.

The very wealthy tend to have much larger houses, and consume much more electricity and heat than families that earn under $100,000 a year.  But should multi-millionaires get tens of thousands of tax dollars back in rebates to help power their McMansions when low-income families are having an increasingly hard time paying their utility bills?

Instead of giving the wealthy a 20% incentive and middle class families a 30% incentive, how about giving larger incentives to homes under 3,000 square feet and much smaller ones to homes over 5,000 square feet?

Adding to the problem, states rarely provide incentives to lower priced renewable energy systems that poorer families favor such as pellet stoves or modern, clean burning wood stoves.  Washington State provides income-based incentives to change old older polluting stoves, with new brands that meet standards stricter than the outdated EPA standards.

Per ton of carbon offset, it’s 3 – 5 times cheaper for a state to give incentives for pellet stoves than for solar panels.  The Alliance for Green Heat believes that lack of incentives for the cleanest modern biomass heaters, that are being extensively promoted in Europe, grew out of biases towards existing stock of wood stoves, which are too polluting.  The result is that the most common renewable energy system in America that is used by millions of low-income families is being overlooked.

Many studies who that in winter, millions of children in America will experience food insecurity (hunger), particularly toward the end of the heating season.  One study by the AARP found that 24% of inhabitants some low-income households go without food for at least one day because of high energy bills.  Surely, more income-based programs that help lower income families replaces major appliances or install affordable renewable energy systems that will lower their utility bills such as modern wood heat or solar hot water, should be explored.

States and the federal government should explore how they can maximize reductions in fossil fuel usage through taxpayer incentives. If studies show that giving incentives to families that otherwise could not afford the renewable system will reduce fossil fuel usage quicker than giving incentives to all social classes, then it may be time to scale back incentives for the richest Americans.