This report explores one policy option for promoting residential energy efficiency: tax credits. It begins by providing an overview of the current residential energy-efficiency tax credits. The report then goes on to provide an economic rationale for residential energy-efficiency tax incentives, introducing the concept of "market failures" and "market barriers" which may lead to suboptimal or "economically inefficient" investment in energy-efficiency technologies. The final sections of this report provide an economic analysis of the primary tax incentives for residential energy efficiency and briefly review various policy options.
Date: September 25, 2012
Creator: Crandall-Hollick, Margot L. & Sherlock, Molly F.