Tax reform provides us with an opportunity to remove current barriers to efficiency investments and to use the tax code as a tool to support future energy efficiency. The challenge is in proposing policies that encourage energy efficiency while still keeping with a key goal of tax reform—simplifying the tax code.
Cost-effective energy-efficiency investments are among the actions we would like to encourage, and not discourage. Unfortunately, in some cases the current tax code acts as a barrier to energy efficiency investments. Tax reform can remove some of these barriers to energy efficiency investment, such as faulty tax depreciation schedules and the fact that the current tax code subsidizes energy waste and taxes energy savings. In addition, targeted but low-cost tax incentives can be used to spur additional energy efficiency investments in ways that spur long-term changes in markets for efficient goods and services and that help to grow the economy.