Investment in Energy Infrastructure and the Tax Code
Federal tax policy provides a broad array of incentives for energy investment. I review those policies and construct estimates of marginal effective tax rates for different energy capital investments as of 2007. Effective tax rates vary widely across investment classes. I then consider investment in...
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| Format: | Working Paper |
| Language: | en_US |
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MIT Center for Energy and Environmental Research Policy
2010
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| Online Access: | http://hdl.handle.net/1721.1/54748 |
| _version_ | 1826208808449343488 |
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| author | Metcalf, Gilbert E. |
| author_facet | Metcalf, Gilbert E. |
| author_sort | Metcalf, Gilbert E. |
| collection | MIT |
| description | Federal tax policy provides a broad array of incentives for energy investment. I review those policies and construct estimates of marginal effective tax rates for different energy capital investments as of 2007. Effective tax rates vary widely across investment classes. I then consider investment in wind generation capital and regress investment against a user cost of capital measure along with other controls. I find that wind investment is strongly responsive to changes in tax policy. Based on the coefficient estimates the elasticity of investment with respect to the user cost of capital is in the range of -1 to -2. I also demonstrate that the federal production tax credit plays a key role in driving wind investment over the past eighteen years. |
| first_indexed | 2024-09-23T14:12:58Z |
| format | Working Paper |
| id | mit-1721.1/54748 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T14:12:58Z |
| publishDate | 2010 |
| publisher | MIT Center for Energy and Environmental Research Policy |
| record_format | dspace |
| spelling | mit-1721.1/547482019-04-11T00:29:46Z Investment in Energy Infrastructure and the Tax Code Metcalf, Gilbert E. Federal tax policy provides a broad array of incentives for energy investment. I review those policies and construct estimates of marginal effective tax rates for different energy capital investments as of 2007. Effective tax rates vary widely across investment classes. I then consider investment in wind generation capital and regress investment against a user cost of capital measure along with other controls. I find that wind investment is strongly responsive to changes in tax policy. Based on the coefficient estimates the elasticity of investment with respect to the user cost of capital is in the range of -1 to -2. I also demonstrate that the federal production tax credit plays a key role in driving wind investment over the past eighteen years. Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. 2010-05-11T15:14:02Z 2010-05-11T15:14:02Z 2009-10 Working Paper 2009-020 http://hdl.handle.net/1721.1/54748 en_US MIT CEEPR (Series);09-020WP application/pdf MIT Center for Energy and Environmental Research Policy |
| spellingShingle | Metcalf, Gilbert E. Investment in Energy Infrastructure and the Tax Code |
| title | Investment in Energy Infrastructure and the Tax Code |
| title_full | Investment in Energy Infrastructure and the Tax Code |
| title_fullStr | Investment in Energy Infrastructure and the Tax Code |
| title_full_unstemmed | Investment in Energy Infrastructure and the Tax Code |
| title_short | Investment in Energy Infrastructure and the Tax Code |
| title_sort | investment in energy infrastructure and the tax code |
| url | http://hdl.handle.net/1721.1/54748 |
| work_keys_str_mv | AT metcalfgilberte investmentinenergyinfrastructureandthetaxcode |