Both tax credits, higher standards needed to cut US energy use: EIA
Washington (Platts)--30Apr2013/328 pm EDT/1928 GMT
Simply continuing federal tax incentives for renewable-energy and
fuel-efficiency standards past their expiration dates will do little to
lower overall US energy consumption through 2040, the Energy Information
Administration said in an analysis Tuesday.
Also increasing federal energy- and fuel-efficiency standards, however,
could mean a drop of 3.8% in energy consumption over that same period,
the EIA said.
Production and investment tax credits now on the books for solar, wind,
geothermal and other renewable sources of power are set to expire
between 2014 and 2016. Those have been extended in the past. If Congress
chooses to do so again, as well as increase the energy efficiency
standards implemented by the Department of Energy for appliances and
buildings, it could lead to reductions in energy use, EIA said.
"[The extensions] generally lead to lower estimates for overall energy
consumption, increased use of renewable fuels particularly for
electricity generation and reduced energy-related carbon dioxide
emissions," EIA said in an analysis associated with its 2013 Annual
Energy Outlook.
Cuts to US energy use at that level would also require an increase in
federal Corporate Average Fuel Efficiency, or CAFE, standards for
light-duty vehicles after 2025, EIA said. Current standards call for
54.5 mpg by 2025, an average annual increase of 4.1%. The EIA analysis
reflected continued increase of 1.4% per year between 2025 and 2040.
Effects on the electricity sector would come through not only indefinite
extensions of production and investment tax credits, but also from
personal tax credits for purchasing renewable equipment, such as solar
photovoltaic panels. In addition, the level of lowered overall energy
use would also require continually increasing federal energy efficiency
standards for appliances and heat and air-conditioning equipment, as
well as an overall 10% increase in efficiency stemming from more
stringent building codes.
Efficiency improvements in the EIA analysis would also stem from an
expanded investment tax credit for combined heat and power projects in
the industrial sector.
Increasing overall efficiency and continuing tax incentives could have
other effects on the economy, EIA warned.
"Although these cases show lower energy prices, because the tax credits
and end-use efficiency standards lead to lower energy demand and reduce
the costs of renewable technologies, appliance purchase costs are also
affected," the EIA analysis showed. "In addition, the government
receives lower tax revenues as consumers and businesses take advantage
of the tax credits."
--Derek Sands,
derek_sands@platts.com
--Edited by Carla Bass,
carla_bass@platts.com
© 2013 Platts, The McGraw-Hill Companies Inc. All rights reserved.
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