New Tax laws for energy efficientcy...

[davemartin88]

It's a Federal tax deduction, as follows:
Federal Tax Credits for Energy Efficiency : ENERGY STAR

Thanks, good information- are these credits subject to being reduced based on income or available regardless of income?

 

[tryan]

Seems to me the feds are pushing on a string ... I installed a geothermal system under the guides of a 7 year pay-back. First winter had a freon leak: $1100. Second winter the mother board went on the hot water system: $1000.

PITA factor aside ... the pay-back on these technologies is WAY longer than advertised. Every year of a major repair (and EVERY repair is major) shifts the pay-back out an entire year.

FWIW, with gas under $2 the hybrids will fall apart well before the pay-back is achieved, imo.

 

[FUEGO]

I wish they would offer $1500 tax credits for buying heavier coats and more blankets and thicker socks.

I definitely agree with the ERD50 position that it is better to have an energy tax that allows everyone to conserve in the most economical manner. Then make it revenue neutral by refunding it in a progressive manner - ie $200 per household flat refund regardless of how much energy you actually used. Heck, charge a 100% tax on energy across the board and simply refund it evenly across all households. Think about how that would change the payback period on geotherm heat systems, added insulation, energy efficient windows, tankless water heaters, CFL's, solar water heaters, solar panels, etc. And it would not cost us, the taxpayers, a penny overall. It would also encourage conservation, smaller, more efficient houses and businesses, etc.

Well, gotta go! Those hour long scalding hot showers aren't going to take themselves!

 

[Zathras]

Seems to me the feds are pushing on a string ... I installed a geothermal system under the guides of a 7 year pay-back. First winter had a freon leak: $1100. Second winter the mother board went on the hot water system: $1000.

PITA factor aside ... the pay-back on these technologies is WAY longer than advertised. Every year of a major repair (and EVERY repair is major) shifts the pay-back out an entire year.

FWIW, with gas under $2 the hybrids will fall apart well before the pay-back is achieved, imo.

I am sorry to hear about your experiences. I would blacklist your installer as I have never heard of anyone having that many issues in so short a time.
Our 2 year old system has had no need for repairs and is on pace to pay for itself just shy of 6 years.

As for hybrids, I value getting the nation off foreign oil for national security reasons. How soon does a persons leather seats or sunroof pay for itself?

To bring this back on topic, I agree with ERD that the BEST way to encourage conservation is through higher fuel/energy prices. However I feel tax credits for typical efficiency improvements is better than nothing.

 

[cho oyu]

I think many people are missing the secondary aspects of a tax credit.

In the example of energy-efficiency tax credits, the primary purpose is to allow purchasers/adopters to reduce initial costs and hopefully reduce long-term energy use.

Now for the secondary aspects which haven't been mentioned: purchases created due to tax credits increase viability for the companies producing goods, allow them to reduce manufacturing (and ultimately consumer) costs through mass-production efficiencies, and promote additional research and engineering in energy-efficiency arenas relevant to the tax credit. Increase prevalence and exposure of these goods in mainstream society also increases sales even after tax credits expire.

These additional benefits may not completely counteract some of the arguments made against tax credits, but they are something that needs to be taken into account when examining the overall efficacy of the concept.

 

[samclem]

I think many people are missing the secondary aspects of a tax credit.

In the example of energy-efficiency tax credits, the primary purpose is to allow purchasers/adopters to reduce initial costs and hopefully reduce long-term energy use.

I hope not. If the technology is any good, then the purchasers/adopters will already have sufficient incentive to buy the product (i.e. theyll get to save energy). The government has no business taking money from all of us for the benefit of a few people who buy a product that benefits them anyway. The only way the tax credit makes sense is if we as a whole benefit enough from each individual implementation of the new technology to make this "uncompensated taking" from other taxpayers worth it--to society as a whole. That's a high standard and I personally doubt these incentives meet that standard.

Now for the secondary aspects which haven't been mentioned: purchases created due to tax credits increase viability for the companies producing goods, allow them to reduce manufacturing (and ultimately consumer) costs through mass-production efficiencies, and promote additional research and engineering in energy-efficiency arenas relevant to the tax credit. Increase prevalence and exposure of these goods in mainstream society also increases sales even after tax credits expire.

I understand what you are getting at here. Still, don't we want the >>most beneficial<< new technologies to get the most business? And hasn't the marketplace (rather than DC lawmakers and powerful lobbyists/entrenched interests) proven itself to be a far better mechanism for determining technological superiority and technical merit?

Let the market decide. If the market doesn't properly value things (due to uncompensated externalities) and this is deemed to be a detriment, then we should make a conscious decision to include these costs in prices via some mechanism, but continue to let the market pick the winners.

 

[cho oyu]

I hope not. If the technology is any good, then the purchasers/adopters will already have sufficient incentive to buy the product (i.e. theyll get to save energy). The government has no business taking money from all of us for the benefit of a few people who buy a product that benefits them anyway. The only way the tax credit makes sense is if we as a whole benefit enough from each individual implementation of the new technology to make this "uncompensated taking" from other taxpayers worth it--to society as a whole. That's a high standard and I personally doubt these incentives meet that standard.
I understand what you are getting at here. Still, don't we want the >>most beneficial<< new technologies to get the most business? And hasn't the marketplace (rather than DC lawmakers and powerful lobbyists/entrenched interests) proven itself to be a far better mechanism for determining technological superiority and technical merit?

Let the market decide. If the market doesn't properly value things (due to uncompensated externalities) and this is deemed to be a detriment, then we should make a conscious decision to include these costs in prices via some mechanism, but continue to lt the market pick the winners.

I haven't run the numbers for these specific credits, nor do I think that this is easy to do - so I don't have a specific opinion on whether these are good or bad.

But the concept of government providing some type of long-term societal direction through tax policy is, I think, important. It has been repeatedly shown that the market is incredibly shortsighted and long-term gains and efficiencies are strongly discounted as compared to near-term gains (i.e. take a quick look at the state of international finance). Ideally, government takes a slightly longer-term view and promotes ideas and concepts that won't have immediate financial payback but will maintain future economic and societal viability.

Most basic research in the US is now sponsored by the federal government; megacorp has essentially eliminated all blue-skies work because of the immediacy of required payback. Why would research into energy efficiency and energy efficiency in consumer products be any different?

I suppose one could say that elimination of government from the whole process would force the free market back into the area of research. However, many large-scale capital projects (and I think that large levels of short-term research funding for relatively quick results fall under the same type of purview) are simply not feasible without government support.

In this specific instance of energy efficiency credits I simply don't see the government as being a malicious entity being guided solely through campaign contributions. Some of the credits may be misguided, but the overall concept of reduced energy consumption is a positive trend.

 

[samclem]

As for hybrids, I value getting the nation off foreign oil for national security reasons. How soon does a persons leather seats or sunroof pay for itself?

Is the government taking money from everyone so that some people get a subsidized purchase of leather seats and sunroofs? Tell me more!

 

[Independent]

Hey, it was T-Al's fabrication - I was just playin' along




But of course.

I'm too lazy to preface every single one of my posts on this subject with it, but I often add the caveat "if we think the govt should be involved in conservation efforts at all"....

So what we are talking about is messing with the free markets. No question about it.

I'm not going to take the time to look back, but in this thread or one of the other recent ones, I mentioned that I think govt involvement can (if done properly - big IF), help to smooth the path for people, so they don't get whip-sawed by big swings in energy prices.

so... "if we think the govt should be involved in conservation efforts at all"... then I want them to do it in the most effective means possible. I don't see putting money upfront for a possible 15 year *break-even* point (not counting interest on that borrowed govt money) on technology which is advertised as being able to help you use more energy than ever before as being effective.

A revenue-neutral tax on fuel is messing with the free markets, but in the most "hands-off" way possible. It motivates people to save energy, but then the free market figures out how to do it.

Now, if you want to argue that the free market does a lousy job of conserving energy, and that is why we had Hummers and SUVs, OK. But that free market was just responding to cheap energy. Make energy expensive and the free market will respond - that was proven with $4 gas.

Now just imagine if the govt in the 70's set an ever-rising and well publicized floor on gas prices. People would have adapted slowly over time and the markets would have responded to the demand for more efficient product and they would modify their behaviors. All that without Congress trying to play Automotive, Electrical, HVAC engineer. They do a lousy job at that, among other things.

-ERD50

Well said.

 

[samclem]

. . but the overall concept of reduced energy consumption is a positive trend.

I agree that it might be a good thing. We're just talking about the means at this point, not the value of the goal itself. Suggested alternate approaches: Target tax credits for specific (politically-favored) technologies or artificially increasign the price of energy (through taxes) so that the market demands and gets more fuel-efficient technologies.

But, I don't agree that the government should necessarily be in this business of reducing US energy use at all, at least unless we make a decision to do it based on a real cost/benefit analysis, not some feel-good bumper-sticker-level reasoning. I could list 30 reasons why ot might be >>good<< to decrease our energy use, but here are a few reasons why it might NOT be a good idea to artificially decrease our energy use (as a matter of national industrial policy).
1) There's only so much "cheap" energy out there (oil, coal, etc). The countries and industries which use this energy now get a (fair? unfair?) advantage over others. I'd rather that this advantage go to US industries
2) American pollution laws are tougher and our fuel use is more efficient than in many other countries (e.g the PRC). So, the US is really doing the ecosystem a huge service if we are the ones who burn these resources rather than allowing them to be burned by less efficient/responsible entities.
3) Saving energy has other costs. I can list scores of ways that saving energy will cost lives and reduce the quality of life in our country. We should understand and enumerate these costs carefuly, and reduce them in a conscious manner, not just pretend that they don't exist.

 

[tryan]

I would blacklist your installer as I have never heard of anyone having that many issues in so short a time.

Less about the installer ... more about the manufacturer (Water Furnace). Problem is parts are 10-14 days away. Much of my costs was bringing in back-up. It was 20 below zero one night of the heat outage (came damn close to loosing the pipes!). Then the second year, 2 weeks without hotwater ... simply unacceptable.

Glad your's still works ... but you need to prepare for when it doesn't. I am just not sure the gov can "push" this stuff into prime time.

 

[ERD50]

BTW, my tankless water heater cost $1,700 installed, and with propane over $2.50/gallon, it has already paid for itself in the few years I've had it.

I just realized how perfectly this makes my point.

1) I am hesitant to install a higher eff water heater, even with a 30% tax credit.

2) You were motivated to install a higher eff water heater, even with a smaller tax credit ($300 at the time?).

And what is only the difference? The price of fuel. It encourages conservation in many ways, not just the technology, but in behaviors.

note - T-Al's propane costs ~ 3x per Therm as my Natural Gas supply.

-ERD50

edit - sorry, I didn't see all the posts since my latest - sorry if I repeated anything, I'll go back and read now

 

[Nords]

I'm a big believer in government incentives, especially tax credits. Our photovoltaic system was 57% funded by federal/state tax credits between 2004-2007, and we'll break even in about 18 months.

Hawaii has the nation's highest per-capita use of solar water heaters-- 35%. The system cost, roughly $5K-$6K, can be repaid within 5-8 years. However very few people would pony up that capex because-- they don't have it! The ability to get most of it back from the state through credits is the incentive it takes to get them off the fence.

And yet there's still not enough compelling financial payback to make the average homebuyer demand a solar water system in their home. So the big bad govt interfered once again by mandating that all new homes have solar water systems starting next year. The retail installers are up in arms at this loss of individual market opportunity, but a bigger builder/developer will surely find mass-production ways to bring down the unit cost-- especially when the system is built-in instead of added on.

Hawaii also has a system of tax credits for investors in certain high-tech and media businesses. I can support that too-- I'd rather put my tax dollars directly into an incentive than give it to a govt bureaucracy and trust them to do right and to do it efficiently.

BTW another compelling govt incentive to get involved in energy conservation is to avoid the construction of new generation plants. Our local utility would have to spend years of study, feedback, and bureaucratic red tape to build yet another electric plant. In fact I'd say it's extremely unlikely to happen. But initiatives for private companies to build generators through burning trash, solar (both PV and hot oil), geothermal, and deep ocean cooling have sailed right on through. The local utility also pays rebates and monthly incentives for various energy-avoidance and conservation schemes, and will soon invoke time-of-day metering. It's all intended to avoid having to waste the money on attempting to build another plant, and I think it's great to send some of that money my way to motivate me to use less energy.

PITA factor aside ... the pay-back on these technologies is WAY longer than advertised. Every year of a major repair (and EVERY repair is major) shifts the pay-back out an entire year.

I agree that the advertising promises more than it delivers, just like a new-car salesman or a retail furniture store. And you're equally screwed if you happen to buy a lemon.

However each buyer has to be able to do their own math for their own situation. In our case the payback was quite a bit less than advertised. I wouldn't give up on a technology or apply a pessimistic correction factor solely because it didn't work out for one particular system.

 

[ERD50]

I'm a big believer in government incentives, especially tax credits. Our photovoltaic system was 57% funded by federal/state tax credits between 2004-2007, and we'll break even in about 18 months.

Sure, it's great for Nords the recipient, but what is the benefit to the rest of the nation who paid for that tax credit?

Are you saying you would not have put in the solar panels if it was a 42 month payback ( 18 months/(1-.57))? I suspect you would. So why ask the rest of the taxpayers to subsidize you.

I can't find anything that is a 42 month payback for me, if I could I'd take it. I wouldn't need a tax credit to do that, I'd just do it.

Not computing for me.

-ERD50

 

[cho oyu]

I agree that it might be a good thing. We're just talking about the means at this point, not the value of the goal itself. Suggested alternate approaches: Target tax credits for specific (politically-favored) technologies or artificially increasign the price of energy (through taxes) so that the market demands and gets more fuel-efficient technologies.

But, I don't agree that the government should necessarily be in this business of reducing US energy use at all, at least unless we make a decision to do it based on a real cost/benefit analysis, not some feel-good bumper-sticker-level reasoning. I could list 30 reasons why ot might be >>good<< to decrease our energy use, but here are a few reasons why it might NOT be a good idea to artificially decrease our energy use (as a matter of national industrial policy).
1) There's only so much "cheap" energy out there (oil, coal, etc). The countries and industries which use this energy now get a (fair? unfair?) advantage over others. I'd rather that this advantage go to US industries
2) American pollution laws are tougher and our fuel use is more efficient than in many other countries (e.g the PRC). So, the US is really doing the ecosystem a huge service if we are the ones who burn these resources rather than allowing them to be burned by less efficient/responsible entities.
3) Saving energy has other costs. I can list scores of ways that saving energy will cost lives and reduce the quality of life in our country. We should understand and enumerate these costs carefuly, and reduce them in a conscious manner, not just pretend that they don't exist.

First, Nords brought up an excellent reasoning behind credits/subsidies that shows the consumer side of the equation: even if there is a short-term payback, many people don't have the increase in initial outlay money for more efficient technologies.

I'll play a bit of devil's advocate to your three points:

1) Decreasing fuel consumption in non-critical areas lowers overall demand and prices. It also extends the period of time in which cheap fuel exists. With the US arguably the nation with the most general technological expertise, this gives us the longest time to figure out how to maintain long-term societal viability, be it through eventual required decrease in energy consumption or inventing the new cheap energy source.

2) If all we do is use energy and stop innovating, then your point is valid. However, what is being proposed is devising cheaper, energy efficient methods to live. It takes quite some time to mature a technology - why not start now and try to propagate our knowledge (for money and goodwill) when other countries determine that externalities (pollution) have to be addressed with high energy consumption? China, for example, is going to have some serious issues if they don't figure out how to control pollution (clean water is already a serious problem).

3) I agree. This needs to be an engineering problem to a large degree. It will ultimately end up being political, though, because of macroscopic environmental and economic effects (cross-border pollution, global warming, etc.).


For this specific issue, it seems to come down to whether someone has actually tried to do a non-partisan economic and environmental analysis of the effect of tax credits/rebates on energy efficient systems and what those results were.

 

[cho oyu]

Sure, it's great for Nords the recipient, but what is the benefit to the rest of the nation who paid for that tax credit?

Are you saying you would not have put in the solar panels if it was a 42 month payback ( 18 months/(1-.57))? I suspect you would. So why ask the rest of the taxpayers to subsidize you.

I can't find anything that is a 42 month payback for me, if I could I'd take it. I wouldn't need a tax credit to do that, I'd just do it.

Not computing for me.

-ERD50

Nords may have, but how many others may not? Be it initial availability of capital outlay, inability or unwillingness to do the economic analysis, or even the psychology of future economic gain discounting, there are a variety of reasons why most people would probably not put in solar systems.

I think one needs to look at this from a societal perspective of 30 years down the road, not 2 years down the road.

Global population is still increasing and noone seems to want to suggest that this is not a good idea.

Many high-population countries are starting to increase energy usage (India and China, for example).

Cheap hydrocarbon based fuel will not last forever; one can argue about how long it will last in terms of decades, not centuries.


And many other countries (S. Korea, Japan, western Europe, China) are realizing this. They are all investing, to some degree, in homegrown energy-efficiency or alternative energy industries. This is both to spawn local commercial viability and also to reduce dependency on external energy sources.

If the US does not keep pace, we will lose significantly in international political capital and economic prowess. As is, we are already incredibly indebted due to energy importing (to the tune of 400+ billion dollars a year - somebody can probably correct me on this number, but the order of magnitude will hold).

I simply cannot see how promotion of energy independence and reduced energy consumption can harm US society as a whole. And heck, because of that solar panel you subsidized, global fuel consumption decreased, less power plants have to be built, and your kWhr cost of energy just dropped by a tiny bit. Everyone benefits

 

[Zathras]

If the technology is any good, then the purchasers/adopters will already have sufficient incentive to buy the product (i.e. theyll get to save energy). The government has no business taking money from all of us for the benefit of a few people who buy a product that benefits them anyway.

Do you also believe the government has no business keeping the prices artificially low for all of us so that just a few have to pay the much higher price? Specifically, those living near refineries or dealing with the first hand affects of coal plants (higher incidence of asthma, lung cancer, shorter life spans, etc)?
Personally, I still think the best solution is the one suggested by ERD and others of a energy tax to truly take these other issues into account.

Is the government taking money from everyone so that some people get a subsidized purchase of leather seats and sunroofs? Tell me more!

No, and I think you know that is not what I said, nor meant to imply. I was responding to his point about a hybrid not 'paying for itself' for years if not decades, if ever. Just bringing up the point that there are very few aspects of a car that 'pay for themselves' ever, why pick out hybrids for the 'they don't pay for themselves' argument?

 

[ERD50]

First, Nords brought up an excellent reasoning behind credits/subsidies that shows the consumer side of the equation: even if there is a short-term payback, many people don't have the increase in initial outlay money for more efficient technologies.

I'll play a bit of devil's advocate to your three points:

1) Decreasing fuel consumption in non-critical areas lowers overall demand and prices. It also extends the period of time in which cheap fuel exists. With the US arguably the nation with the most general technological expertise, this gives us the longest time to figure out how to maintain long-term societal viability, be it through eventual required decrease in energy consumption or inventing the new cheap energy source.

2) If all we do is use energy and stop innovating, then your point is valid. However, what is being proposed is devising cheaper, energy efficient methods to live. It takes quite some time to mature a technology - why not start now and try to propagate our knowledge (for money and goodwill) when other countries determine that externalities (pollution) have to be addressed with high energy consumption? China, for example, is going to have some serious issues if they don't figure out how to control pollution (clean water is already a serious problem).

3) I agree. This needs to be an engineering problem to a large degree. It will ultimately end up being political, though, because of macroscopic environmental and economic effects (cross-border pollution, global warming, etc.).


For this specific issue, it seems to come down to whether someone has actually tried to do a non-partisan economic and environmental analysis of the effect of tax credits/rebates on energy efficient systems and what those results were.

OK, but some of point # 1 is debatable - lowering prices tends to increase demand. One analogy - our computers are 1000x faster than they once were, but we just find more things to do with that power.

On #2 (and some of #1), the point some of us keep making is that raising the price of fuel with taxes will motivate those things *better* then specific tax credits.

Analysis! We don't need no stinkin' analysis! We saw what happened with $4 gasoline! Thousands of solutions, not just a few govt approved ones. Isn't it clear which is better?

Another side-point: we might be better off waiting until these technologies are better. A solar panel takes a HUGE amount of energy to produce. So much that if you put one in a good solar environment, the first two years it is just trying to catch up to replace the energy it took to make it. It is a net LOSS in energy for those first two years. So that is a big energy sink in itself. If solar panels were twice as efficient, or used half as much energy to produce, we would all be better off. There is plenty of demand to drive innovation, it might be best to hold off on wide-scale adoption until the technology stands on it's own two feet.

Again, the unintended consequence of solar panel credits is that it stifles research into competing technologies, which might prove to be even better. I can give examples, but I need to run. The free market does not discriminate like that.

-ERD50

 

[eridanus]

No, and I think you know that is not what I said, nor meant to imply.

Actually, the answer is "yes, they do." Remember the heavy SUV tax lophole? The government does indeed subsidize the purchase of 3+ ton luxury SUVs with leather seats and sunroofs. Sadly, samclem, that loophole has been tightened a bit - the immediate deduction is now only $25,000 for non-farm business purposes.

 

[Zathras]

Oh lord, you had to remind me. Although that wasn't targeted at 'leather seats' I am sure it was used that way by many.

 

[samclem]

I simply cannot see how promotion of energy independence

I know it is counter-intuitive (Who could be against energy independence?)
but pursuing it absolutely CAN be bad for the country. If producing our own energy is more expensive than buying it from someone else, then any industry or consumer that depends on US electricity will be disadvantaged by pursuing energy independence.

For the world's most extreme example, look at North Korea and their
"juchee" progam of economic independence. The Dear Leader proclaims that they will be independent in all areas, so they produce their own cars. They make maybe 100 a year, all are incredibly expensive and pieces of crap. Those 100 car "owners" and everyone else in North Korea would be better off if they imported cars at 1/10th the price that would work 10 times as well. But, they are economically independent--a meaningless goal for them as it would be for us.

The US could be "banana independent." We could grow all our own bananas domestically and say goodbye forever to dependence on foreign bananas. We'd need giant greenhouses and tremendous amounts of water and energy to do it, but it could be done. Yes, bananas would cost $6 per pound, so if you bought any you'd have less money to spend in the rest of the economy. Would that be good for the US? Is that the best use of our resources?

Anybody who believes in the overall benefit of free trade (caused by mutual exploitation of local efficiencies) cannot simultaneously argue for the "benefits of independence" in any significant economic area as a worthy goal in itself. The reasoning is identical.

 

[ERD50]

I simply cannot see how promotion of energy independence and reduced energy consumption can harm US society as a whole. And heck, because of that solar panel you subsidized, global fuel consumption decreased, less power plants have to be built, and your kWhr cost of energy just dropped by a tiny bit. Everyone benefits

OK, samclem covered one aspect, I'll take the second.You are going to have to show me how $1,000 from the Fed coffers (our money, borrowed at the rate of Govt bonds) provides a net economic gain for others in lower fuel bills. I understand that *if* ( a big IF with some of these credits) consumption is decreased, prices are driven down, but I can't see how that would exceed the amount paid out for marginal benefits.

If it were a BIG savings in energy for the $ expended, I could see it. But then, people would do it w/o credits. I don't know anyone who lives in a house in this area w/o insulation. Why is that? Not just building codes - people *know* it will save them money.

Only some % of people will make these changes. Also, you have to consider with and w/o the credit. In my case, I *will* be replacing my water heater. Even though I'm I plan on getting the cheapest, least efficient model with the features I want (glass lined tank, same basic model that has lasted over 22 years in my house), it is more efficient than the old one. Old rated at 313 annual Therms, new at 254 - assuming the measurements are the same as they were in 1986). Now, some people will do the math and say that the credit was responsible for ALL the increase in savings over my old one, but in reality, it would only be responsible for the incremental increase over the cheaper, but somewhat more eff unit I would have bought w/o the credit.

Nords may have, but how many others may not? Be it initial availability of capital outlay, inability or unwillingness to do the economic analysis, or even the psychology of future economic gain discounting, there are a variety of reasons why most people would probably not put in solar systems.

And how about those of us who have done the math and decide it is NOT worth the expenditure? And then we see people take advantage of the credit w/o thinking (free money!)..., or to fill their hot tubs with the "energy efficient" "endless hot water" unit.... kinda burns me up.

I think one needs to look at this from a societal perspective of 30 years down the road, not 2 years down the road.

I am. That is why I keep saying that if we want the govt to push conservation, they should have put an ever rising, publicized floor on energy prices over the past 30 years. Let the free market devise real solutions, rather than having COngress "bless" a select few. We could start now, better late than never.

Global population is still increasing and noone seems to want to suggest that this is not a good idea.

Many people suggest it. Few want to legislate it.

Many high-population countries are starting to increase energy usage (India and China, for example).

Should we give them tax credits too? You said these tax credits are a benefit because it will lower energy prices for everyone. Energy is a fungible commodity. So it should make no difference if we save a barrel of oil in China or India or the US, a barrel saved will lower costs. This is a missed opportunity, based on your thoughts. We should send them container ships full of tax credits, energy prices will decline dramatically for us and everyone on the planet! /sarcasm/

Like wise (seriously now), that lower energy cost you claim we get with these credits is lowering energy costs for everyone on the planet. That money really has an uphill battle, and it means my tax dollars are going to lower energy costs for people in other countries. Why do I care to do that? So they can use more of this cheaper energy, which then offsets the conservation here in the US? It makes no sense.

Cheap hydrocarbon based fuel will not last forever; one can argue about how long it will last in terms of decades, not centuries.

Exactly why we should tax it (apply my caveat here). What causes people to conserve something better than raising the price of it? I'll say it again: $4 gas?

And many other countries (S. Korea, Japan, western Europe, China) are realizing this. They are all investing, to some degree, in homegrown energy-efficiency or alternative energy industries. This is both to spawn local commercial viability and also to reduce dependency on external energy sources.

Same point as samclem - some of those countries have accomplished nothing but raising the price of their energy to their citizens. Why use a more expensive substitute?

-ERD50

 

[ERD50]

Actually, the answer is "yes, they do." Remember the heavy SUV tax lophole? The government does indeed subsidize the purchase of 3+ ton luxury SUVs with leather seats and sunroofs. Sadly, samclem, that loophole has been tightened a bit - the immediate deduction is now only $25,000 for non-farm business purposes.

Oh lord, you had to remind me. Although that wasn't targeted at 'leather seats' I am sure it was used that way by many.

Good story on the "Hummer loophole":

Bill Takes Aim at 'Hummer Tax Loophole' : NPR

Short story - unintended consequence of a bill from Congress with "good intentions" to stimulate a specific part of the economy. See a pattern here?

-ERD50

 

[tryan]

A friend spent all of last year building his dream home; complete with geothermal heat and solar panels. Late in the year he caught wind of the coming tax credits ... sooo he told his geothermal and solar contractors not to bill him until 2009.

Says he'll get 10k back on just the geothermal. So he paid 30k ... mine was 24k (in 2005 with a 10% Bush credit). Similar systems : 2 water to water units for radiant tubes and hot water plus a water to air system for heat/ac.

I wonder how much of the price increase is driven by the increased tax credit?

 

[ERD50]

I wonder how much of the price increase is driven by the increased tax credit?

heh, heh, heh, another confounding influence from the law of unintended consequences!

Take that 94.1% furnace mentioned earlier. The dealer will have a hard time moving those since the 95% units qualify for a credit. So.... law of supply/demand says: lower the price on the 94.1% to move them. And/or, *raise* the price (or offer less of a discount - same thing) on the 95% due to higher demand.

Kind of alters the equation, doesn't it? Yet, Congress looks at these as static rather than dynamic pricing models.

It's one of the reasons I hate "gates" on things ( like the 95% eff "gate"). Just about everything should be done on a slope rather than a gate. It avoids many unintended consequences. If you are going to have a credit, make it a sliding scale.

These credits stink on so many levels, I just can't believe anyone (other than Congress critters getting kickbacks/votes - there's a "good" reason for them) is defending them.

edit/add - OK, so your friend was installing the geothermal anyway! So WTF did these stinkin' credits do for us? Why am I funding your friends heating unit? Let him pay for it himself! Nothing against your friend - and he *should* take advantage of the offer since it is out there - I just think it is stupid that it is offered.


-ERD50