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Monday, October 31, 2005

Want a cut of the $14 billion in energy law? - Green Machines - MSNBC.com

Want a cut of the $14 billion in energy law? - Green Machines - MSNBC.com: "Here's how the credits work: Buy or lease a hybrid gas-electric vehicle and qualify for a tax credit of up to $3,400. Install solar power in your home and get up to a $4,000 tax credit. Make your home more energy efficient and get credits ranging from $50 to $500."
The push for vehicles with better fuel economy and more efficient energy use in the home drives incentives. Its possible to find tax relief in the purchase of your new hybrid car, or perhaps you can install an expensive solar power source and receive subsidies for that. The government if offering money in the form of "tax breaks" to provide incentive to use economical or what I would consider sustainable goods.
If we look at these subsidies in terms of "efficiency" then these goods must produce positive externalities. The case of personal solar power I can see some positive externalities, since not only do you not have to rely much on local power plants; there is also chance that you create output back into the local community benefiting others with more power available. If your putting into the market, knowingly or not, you should find a return for that. So in the case of solar power, yes subsidies should be provided in essence pay for the extra power.
The concern in what of hybrid cars? Certainly they are more fuel efficient and already offer some incentive to alternative. A hybrid has better gas mileage, which in the long run save money. What is the connection to incentives to purchase hybrid vehicles. "BALTIMORE - For months now, hybrid drivers in some areas across the country have been getting access to commuter lanes, but Baltimore is going a step further — offering hefty discounts on monthly parking for owners of the gasoline-electric vehicles." Cities like Baltimore and LA are offering even more incentives for hybrids, such as cheaper paid parking and access to HOV lanes. Why should this be? Hybrid cars are the next best alternative to gaguzzlinggg cars. With gas prices raising the fuel economy becomes attractive to more people. Do hybrids offer positive externalities? Perhaps the less pollution produced is considered, but the car still produces some amount of pollutant although perhaps harmless, but certainly not beneficial. Another arguable point is that less gasoline is used in the market by hybrids, but that just cause a shift in demand. There are no definite positive externalities demanding that government offer a subsidy for hybrid cars.

Comments:
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All the best, Alternate Energy Sources
 
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