Getting into the Act: Enticing the Consumer to Become “Green” through Tax Incentives


Energy tax incentives have historically focused on the supply of energy sources. The U.S. government spends billions of dollars each year propping up the petroleum industry through tax incentives. For example, oil and gas incentives encourage production and enhanced oil recovery strategies. Furthermore, most of the tax incentives directed towards “environmentally friendly” technologies focus on creating new technology or increasing alternative fuel supplies. Meanwhile, federal policy makers have largely neglected the demand side of the energy equation. Properly designed tax incentives can effectively encourage energy consumers to conserve energy and use different energy sources. On the federal level, the clean fuel vehicle deduction encouraged consumers to acquire hybrid gas/electric vehicles. Several states have also employed tax incentives to encourage consumers to use "green" energy sources. This paper explores the value of the consumer in promoting the environment. The untapped consumer needs a little prodding to become a larger part of the environmental reform movement. Well-designed tax incentives can provide such a nudge.


Environmental Law | Natural Resources Law | Tax Law

Date of this Version

March 2006