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But it is not nothing, and it is better than anything else that’s likely to come out of this Congress.
There seems to be little chance that the GREEN Act will make it into the spending bill whole. It’s primary author, Rep. Mike Thompson (D-CA), told Bloomberg this week, somewhat optimistically, “I think my clean energy bill is something that we will pass after all this is done.”
But there’s a chance a few credits could make it in. Certainly the EV credit is worth fighting for, especially since, if Democrats ever get control of Congress, they’re going to be fighting against these same Koch-funded groups. Storage is worth fighting for. So is solar. Get something!
Tax credits are bad policy, but they exist
In a sane world with a functioning legislative apparatus, tax credits would not be a primary clean-energy policy tool. Even in industrial policy terms, they are somewhat crude. Ideally you’d want to get clean energy markets going with a balanced portfolio that included a price on carbon, performance standards in key industries, demand pull created by federal and state government procurement, targeted R D in hard-to-decarbonize sectors, and dynamic financial incentives structured to be sensitive to time, place, and decarbonization potential.
But almost all of that would require big legislation from Congress. And the US is now governed by two political parties with incommensurate worldviews, values, and aspirations for the country. They can no longer agree on big things. Or medium things. And there are only a few scattered small things they still agree on.
Most of those small things are tweaks of the tax code — new credits, exemptions, refunds, adjustments, and the like — which can often pass in reconciliation bills (that aren’t subject to filibuster) or tucked away in must-pass funding bills like the one being discussed now.
This is precisely the kind of governance that causes every economist to cringe: here a subsidy, there a refund, favors for various constituencies tucked away in big bills where no one will ever see or question them. More and more policy gets carried out this way because it’s practically the only policy avenue left open.
It results in the bulk of government policy being obscured by the thicket of the tax code, so that most people never see or understand the role government plays in their lives — what Suzanne Mettler, a Cornell University professor of government, calls the “submerged state.”
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