Would Energy Tax Policy Significantly Influence the Diffusion Rate of The Renewable Energy Portfolio in The United States?
AbstractThis paper empirically investigates the impact of tax credit to renewable energy and net energy import on renewable energy consumption in the United States. The study presents findings on the possible factors that may affect four main renewable energy consumer groups which are residential, commercial, transportation and industrial consumption. Using a linear model and time series data for the period 1985-2015. Our empirical results indicate that inward tax credit is an important vehicle for achieving renewable energy development. It clearly is seen that commercial, industrial, and transportation consumption of renewable energy significantly increase. Imposing more import barriers that discourage energy import can greatly help the domestic renewable energy consumption. However, industrial consumption of renewable energy is affected positively by the increase in the prices of industrial gas and negatively by increasing in the prices of industrial electricity. While many renewable energy studies have relied on less precise measurement factors (e.g. international oil prices the only and main energy prices that determine renewable energy consumption), our study uses direct indicators as a measurement of renewable energy consumption. We find tax credit has a significant positive impact. Other key factors that spur renewable energy consumption are co2 emission, electricity prices, and gas prices. Thus, suggesting the federal government of United States to continue subsidizing renewable energy development which helps to decrease the prices of renewable energy( electricity for the four types of renewable energy consumers), and spur renewable energy consumption and development. Another key factor that spurs renewable energy consumption is GDP.
Key Words: Renewable energy consumption,Energy Tax Policy, Crude Oil Prices, gas Prices, and Coal prices.
JEL classification: C36, Q2, Q42.
Hind Alnafisah: PhD candidate, Department of Economics, Howard University, Washington DC, United States;
Hind Alnafisah: Teaching Assistant, Economics Department, School of Business, Princess Nora bint Abdul Rahman University, Riyadh, Saudi Arabia.