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Concerns over high energy prices, sustainability and energy security have spurred interest in, and action toward, expanding the alternative energy industry in the United States. Rather than depending solely on federal action, many states have taken the initiative to develop their own alternative energy programs and incentives. These programs are investments that are expected to yield multiple benefits beyond energy generation, such as job creation and economic development, increased individual incomes and business revenues, and with them, state tax revenues. The stakes are high, as states are jockeying to attract the investment and qualified human resources needed to fuel ventures in their jurisdictions.
Various public policy levers can be employed to expand the alternative energy envelope. These levers include:
- Incentives to boost supply, such as production subsidies, tax relief on property, and sales tax exemption for projects.
- Incentives to encourage demand, such as tax relief on alternative energy consumption.
- Policies to improve distribution networks for alternative fuels, such as targets for gas stations providing E85 fuel.
- Developing and implementing standards, mandates and regulations, such as Renewable Portfolio Standards, that define the portion of total production that should come from renewable sources.
- Funding to develop new technologies or refining existing ones, such as Renewable Energy Development Funds that provide research grants for developing new technologies.
- Developing markets and market mechanisms to nurture the alternative energy space, such as the emerging market for carbon credits.
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Author:
Mohammed Rehan Malik, Ph.D., senior consultant, Deloitte Consulting LLP
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Power to the People
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