Many taxpayers were upset with the $700 billion bailout passed two weeks ago by Congress to relieve the current economic crisis. If these taxpayers have any interest in the future of alternative energy, they should reconsider this opposition. Congress passed the Energy Improvement and Extension Act (EIEA) of 2008 as part of a three-pronged effort to shore up America’s economy. Congress amended the Internal Revenue Code of 1986 to create tax incentives for new sources of energy.
The auto industry’s turn to hybrid vehicles may evolve quickly due to the EIEA’s provision for higher tax credits on plug-in hybrid electrics vehicles (PHEVs). These credits would be available for up to 250,000 PHEVs starting January 1, 2009 with a potential phase out if this number isn’t met in a timely manner. Each qualifying buyer would get a $2,500 base credit along with $417 for each kilowatt hour (kWh) over a minimum of 4 kWh. The maximum credit for a light-duty vehicle would be $7,500 while heavy-duty vehicle owners could receive up to $15,000 in credits.
Congress also seemed willing to extend tax credits to alternative energy producers as they were doling out money to lenders. The EIEA would provide credits for producers that work in geothermal, solar and wind energy to ease utility bills for homeowners nationwide. While Congress also offered credits for “clean coal” technologies, these credits are connected to a mandatory cut in nitrogen oxide (NOX) between 20% and 40%. The language in EIEA may be vague at this point but the themes sounded by Republicans and Democrats are surprisingly progressive.
We need look no further than a provision to encourage commuters to bike to work through tax adjustments to find progressive steps toward greener transportations in the EIEA. Bikers would be able to claim mileage from commuting on two wheels as a fringe transportation benefit that would reduce taxable income. The current mortgage meltdown and overall financial crisis may not lead many families to think about greener transportation solutions. We should look at the EIEA as a glimpse into the future of alternative energy as well as a solution to these day-to-day concerns. The EIEA could cut everything from commuting costs to household heating prices if its words are followed through into substantive action from coast to coast.
