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Getting climate, energy & environment news right.

Tax Incentives Are No Way to Drive Energy Innovation. Here’s Why.

Adam Michel and Nick Loris outline on The Daily Signal why tax incentives fail to drive energy innovation.

The C3 Take
  • While politically enticing, tax incentives stifle energy innovation.
  • Tax credits distort the market by disincentivizing investment into technologies that the government doesn’t favor.
  • Energy companies often become overly reliant on these subsidies which leads to inefficient and wasteful practices.
  • Ultimately the best way to lower emissions and spur innovation is by unlocking the power of the private sector and ending tax incentives.

“Business models built around taxpayer-funded subsidies also distort the incentive that drives innovation. Preferential tax treatment reduces the necessity for an industry to make its technology cost-competitive, because the tax credit shields a company from recognizing the actual price at which its technology is economically viable.”

Read the full article here.

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.

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