Public policy wonks talk about incentives and disincentives as ways to alter people’s behavior. There are the sticks, like the proposal to fine drivers who have one hand on the wheel and the other on a cell phone. (You may have heard our show about it.) And then there are the carrots: like tax rebates and credits and grants of all kinds that reward the kind of action the state wants to see more of. If there’s one broad sector this state — and the rest of the union — is invested in investing in, it’s green energy. But are the various state (and federal) incentives necessary? And are they working?
The Business Energy Tax Credit, or BETC, started out primarily as a way for the state to encourage companies to invest in renewable or efficient energy systems (say, putting solar panels on a roof). In 2007, Governor Kulongoski successfully pushed to increase the credits and expand them to companies that make these technologies (say, a solar panel manufacturer). The latest BETC expansion, in front of the Legislature right now, would apply to manufacturers of electric vehicles — something the Norwegian EV company Think is paying a lot of attention to as they consider building a plant here.
How effective are these credits? BETC fans point readily to a recent study (pdf) by ECONorthwest exploring the larger effects on the state economy of credit dollars. Detractors look at the same study, and argue that the numbers don’t speak too well for the credit.
And then there are complaints about the pass-through system, which attracted some attention recently after the German solar manufacturer SolarWorld sold $11 million worth of credits to Wal-Mart for $7.3 million. If SolarWorld only needed an incentive of $7 million, argues Chuck Sheketoff, why did the state have to give up $11 million in revenue? And if there is an impressive return on investment to be made in the pass-through, why shouldn’t individuals be given the chance to take advantage of it? (One new business is asking the same question.)
How have tax incentives affected your business? Have you installed wind turbines or solar panels on your building. Did tax credits put you over the edge or sweeten an already done deal? Have you been hired by a company that moved here to take advantage of tax credits? Would you take part in the pass-through program as an individual, paying $3500 today for a $5000 tax break over the next few years?
- Richard Canny: CEO of Think, a Norwegian electric car company
- Chuck Sheketoff: Executive Director of the Oregon Center for Public Policy
- Dave Van’t Hof: Senior Policy Advisor for Energy and Sustainability to Governor Ted Kulongoski
More Think Out Loud
OPB | April 16, 2015