–Cut and pasted below, without edit and in full, are recommendations I fully support. I hope you do so too. They concern the clean energy provisions in President Biden’s Build Back Better (BBB) initiative and the Justice40 initiative that seeks to deliver 40 percent of the overall benefits of federal investments in climate and clean energy to disadvantaged communities.
The recommendations are quoted at length because their message is central to the climate emergency and racial justice:
As a cornerstone of federal climate policy, the design and implementation of clean energy tax credits are critically important for ensuring equity and justice in the climate transition. In this light, and with the aim of improving the tax credit program as proposed in BBB—or as modified, potentially, by other proposals—we conclude our analysis with a suite of recommendations primarily focused on oversight of the program.
In addition to the positive reforms outlined above—which have already been proposed by legislators—addressing inequities in a tax program on this scale should start with oversight and programmatic evaluation from the Department of Treasury. In fact, many of these changes are similar to reforms proposed for Opportunity Zones in a bill introduced by Senator Ron Wyden (D-OR) (Opportunity Zone Reporting and Reform Act 2019). This legislation requires, among other things, public information reporting from Opportunity Zone investors, terminating zones that are not low-income or impoverished, and prohibiting non-beneficial investments that drive gentrification, such as stadiums and luxury hotels and apartments. For energy tax credits, the following changes could—and should—be adopted:
- Corporations, developers, and other project sponsors claiming investment and production tax credits should have reporting requirements to provide information for assessing equity impacts of the resulting clean energy buildout.
- The Department of Treasury should also develop robust and measurable beneficial project criteria, not only for the low-income community solar program (although that is most critical) but for all projects seeking credits from the program. Credited projects are not location- or community-neutral, and that principle should be codified in Treasury policy to maximize equity impacts of energy tax credits and especially racial equity impacts. To this end, the function of developing beneficial project criteria could be shared with other agencies as well as states and localities.
- Oversight of individual energy credits should include evaluating distributional impacts, considering both income and race, and this should inform programmatic changes or revisions of the law that will reduce persisting disparities in the program.
- Credits for eligible energy sources and technologies considered harmful by environmental justice advocates should be subject to local or community review and accountability. Treasury guidance on community review and conditions for revocation and/or repayment of credits should be developed if unavailable, and consistently utilized. This should include pollution and public health reporting requirements for corporations or other businesses owning/operating energy facilities that emit local pollution or otherwise pose local health risks.
- Energy tax equity investments should be profiled for climate and community impacts.
- No corporation currently or previously found to be in violation of environmental laws or labor and workplace safety laws should be eligible for credits.
- And finally, given the troubled distributional track record of tax credit policy generally and clean energy tax credits specifically, the question of how Justice40 applies to climate-related Treasury programs—especially one on this scale—deserves consideration by the Biden administration and more attention from advocates.
I wouldn’t change a word, and every word nails down what are to many of us obvious and true needs and concerns.
–But, oh, the verbiage surrounding the “Recommendations”! All that rah-rah about what perhaps, may, can, could be, and should be, all this magicked-up bromide that the only genuine political project is to set progressive tax rates and redistribute, and not even a homeopathic whiff of what has actually worked for achieving the ends sought for and by those obviously vulnerable.
IMHO, the author-advocates would have been better off publishing the much-needed recommendations on their own.
Daly, L. and S. Chi (2022). Clean Energy Neoliberalism: Climate, Tax Credits, and Racial Justice. Issue brief in the All Economic Policy Is Climate Policy series. Just Solutions Collective and The Roosevelt Institute. Those interested in the brief’s very apt proposals can download the document at https://rooseveltinstitute.org/publications/clean-energy-neoliberalism/