COOL CODE - FEDERAL-TAX INCENTIVES TO MITIGATE GLOBAL WARMING

The Clinton Administration's fiscal year 1999 budget marks a revival o f interest in using the federal income tax Code to influence energy de mand. In the 1970s, Congress enacted tax incentives for energy conserv ation and alternative fuels. Now, the threat of global warming has aga in focused attention on energy use. This paper evaluates the proposed federal tax incentives to mitigate global warming, concluding that mos t of the government's funding for energy conservation, alternative fue ls, and other global warming mitigation related expenditures is throug h the tax Code, rather than direct spending programs. The tax incentiv es in the Administration's budget proposal are best viewed as demonstr ation projects designed to provide information about the commercial po tential of certain technologies, not a least cost method of reducing g reenhouse gas emissions.