Clean Energy Neoliberalism: Climate, Tax Credits, and Racial Justice

In “Clean Energy Neoliberalism: Climate, Tax Policy, and Racial Justice,” co-authors Lew Daly and Sylvia Chi explain how energy tax credits embody a neoliberal approach to climate policy that continues to rely heavily on private incentives and market choices to drive the energy transition. They discuss how this could not only privatize the clean energy future but also squander a once-in-a-generation opportunity for remedying historic harms and chronic underinvestment in communities of color.

Specifically, the authors explain and assess:

• The historic role of tax credits in creating a “hidden welfare state,” designed primarily for the benefit of affluent white households, and how the BBB energy tax credit proposal reproduces and expands this trend to further lock in distributional inequities through the tax code. 
• How energy tax credits contribute to race and income disparities in who has access to clean energy and who is burdened by costs of the transition away from fossil fuels. 
• Policy reforms in the current proposal that could have some positive effects on equity, as well as the significant problems that remain in the overall program. 

The authors conclude with a suite of recommendations focused on oversight of the proposed energy tax credit program based in the Department of Treasury, including:

• Public reporting requirements to track equity impacts of commercial clean energy development; 
• Distributional assessment of residential energy credits by race and income and development of programmatic reforms to close equity gaps in energy tax credit programs; and 
• Community review of credits allocated to energy sources considered harmful by environmental justice advocates.

Read the rest of the “All Economic Policy Is Climate Policy” series.