How Effective are U.S. Renewable Energy Subsidies in Cutting Greenhouse Gases?

Maureen Cropper, Brian C. Murray, Francisco de la Chesnaye and John M. Reilly, American Economic Review Papers and Proceedings 104(5), 569-574, May .


The federal tax code provides preferential treatment for the production and use of renewable energy. We report estimates of the subsidies' effects on greenhouse gases (GHG) emissions developed in a recent National Research Council (NRC) Report. Due to lack of estimates of the impact of tax provisions on GHG emissions, new modeling studies were commissioned. The studies found, at best, a small impact of subsidies in reducing GHG emissions; in some cases, emissions increased. The NRC report also identified the need to capture the complex interactions among subsidies, pre-existing regulations, and commodity markets.

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