How Effective Are U.S. Renewable Energy Subsidies in Cutting Greenhouse Gases?

The federal tax code provides preferential treatment for the production and use of renewable energy. This analysis in The American Economic Review: Papers and Proceedings provides estimates of the subsidies' effects on greenhouse gas emissions developed in a recent National Research Council (NRC) report. Due to lack of estimates of the impact of tax provisions on greenhouse gas emissions, new modeling studies were commissioned. The studies found, at best, a small impact of subsidies in reducing greenhouse gas emissions; in some cases, emissions increased. The NRC report also identified the need to capture the complex interactions among subsidies, pre-existing regulations, and commodity markets.