Congressional Research Service Report Released: Residential Energy Tax Credits: Overview and Analysis

The Congressional Research Service (CRS), the public policy research arm of Congress, just issued the report Residential Energy Tax Credits: Overview and Analysis (Sept. 25, 2012). The 27 page report authored by Margot L. Crandall-Hollick  and Molly F. Sherlock,

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 (appendices to this report provide a more detailed legislative history). 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. That section summarizes various market failures and market barriers in the residential energy sector and outlines ways tax incentives correct them. 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.