U.S. Senators Alex Padilla and Dianne Feinstein Lead 25 Senators in Promoting Access to Solar Energy for Low- and Moderate-Income Households

October 5, 2021 – WASHINGTON, DC – U.S. Senators Alex Padilla, Dianne Feinstein (both D-Calif.), Cory Booker (DN.J.), Tammy Duckworth (D-Ill.), Jon Ossoff (D-Ga. ), and Brian Schatz, D-Hawaii led a group of 25 senators calling on Senate Majority Leader Charles Schumer (DN.Y.) and Finance Committee Chairman Ron Wyden, D-Ore., To offer a direct payment option for residential tax credits for Include renewable energies in Section 25D of the Internal Revenue Code of 1986 (25D). In the letter, the senators explained how a direct payment option would help low- and middle-income households (LMI) install solar energy systems and meet President Biden’s goal of reducing greenhouse gas emissions by 50% by 2030 from 2005 levels.

Senators Padilla and Feinstein both advocate tax incentives for low- and middle-income families, whose efforts are helping to mitigate the effects of the climate crisis. Earlier this year they introduced laws to reduce the tax burden on homeowners who make water efficient choices. They also introduced laws that give used electric car buyers tax rebates of up to $ 2,500 that would help low- and middle-income households purchase electric vehicles.

“This substantial tax credit is intended to help private customers install renewable energy systems such as solar, wind and geothermal energy, but without a direct payment option, the effective low and middle income households (LMI) that would benefit most from distributed generation are for the Access to this tax credit blocked “, wrote the senators. “We believe that a direct payment option will not only help us meet President Biden’s goal of reducing greenhouse gas emissions by 50% from 2005 levels by 2030, but will also help combat the long-term effects of climate injustice.”

“Renewable energy and environmental lawyers estimate that about half of American households – approximately 60 million households – do not owe enough taxes to get the full 25D tax credit in a single year under applicable law.” continued the Senators. “However, since these LMI households spend a larger part of their income on energy bills, they will benefit disproportionately from installing decentralized electricity generation such as solar energy on their properties. We have an obligation to ensure that all Americans have equal access to the benefits of the energy transition, and ensuring a 25D direct payment is critical to that goal. “

Taking into account the number of LMI households owning their own home, the current tax regime prevents an estimated 26 million households from fully benefiting from the residential solar tax credit in the same year the system was purchased and put into operation, including 3 , 2 million black households and 3 million Hispanic households. Introducing a direct payment option would allow homeowners to fully and instantly realize their tax credits through an IRS refund, providing much-needed capital to LMI households while directly addressing the deepening climate crisis.

To ensure that the direct payment option is used effectively and fairly, the senators proposed “The establishment of a simple installer-based review process with the Internal Revenue Service (IRS)” where “homeowners would provide the federal government with basic data and evidence of their solar or other renewable system installation while the installer provides their own separately.” Data that the IRS can use to confirm the homeowner’s claim. “

The senators closed the letter, calling for the direct payment option to be included in the upcoming reconciliation package to ensure our nation is able to “advance our environmental and climate justice goals, reduce greenhouse gas emissions, and create more well-paying community jobs to create all over the world ”. Land – building on an estimated 85,000 jobs in residential solar installation in 2020. “

The letter was written by Senators Michael Bennet (D-Colo.), Ed Markey (D-Mass.), Sheldon Whitehouse (DR.I.), Chris Murphy (D-Conn.), Rev. Raphael Warnock (D-Ga .) signed.), Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), Jeanne Shaheen (DN.H.), Tina Smith (D-Minn.), Patrick Leahy (D-Vt. ), Kirsten Gillibrand (DN.Y.), Sherrod Brown (D-Ohio), Jeff Merkley (D-Ore.), Dick Durbin (D-Ill.), Richard Blumenthal (D-Conn.), Maggie Hassan (DN .H.), Mazie Hirono (D-Hawaii), Tim Kaine (D-Va.) And Martin Heinrich (DN.M.).

The full text of the letter can be found here and below:

October 1, 2021

The Honorable Charles E. Schumer

Majority leader

United States Senate
Washington, DC 20510

The honorable Ron Wyden

Chairman, Finance Committee

United States Senate

Washington, DC 20510

Dear Leader Schumer and Chairman Wyden:

As you continue the critical work on developing clean energy tax credits to help the United States navigate the climate crisis moment in the impending reconciliation package, we urge you to include a direct payment option for the renewable home ownership tax credit in section 25D to incorporate the 1986 Internal Revenue Code (25D). This must-have tax credit is designed to help residential customers install renewable energy systems like solar, wind, and geothermal energy, but without a direct payment option, it is effectively blocking the low and middle income households (LMI) that would benefit most from distributed generation from access on this tax credit. We believe that a direct payment option will not only help us meet President Biden’s goal of reducing greenhouse gas emissions by 50% from 2005 levels by 2030, but will also help combat the long-standing effects of climate injustice.

Renewable energy and environmental justice advocates estimate that roughly half of American households – roughly 60 million households – do not owe enough taxes to get the full 25D tax credit in a single year under applicable law. However, since these LMI households spend a larger part of their income on energy bills, they will benefit disproportionately from the installation of decentralized electricity generation such as solar energy on their properties. We have an obligation to ensure that all Americans have equal access to the benefits of transitioning to renewable energy, and ensuring a 25D direct payment is critical to that goal.

As the country also faces worsening climate-related natural disasters that cripple the power grid, it is critical to expand decentralized power generation so that communities can recover electricity for basic needs more quickly. Most recently, after Hurricane Ida, homes powered by renewable energy and battery storage kept electricity on during an extended blackout. The expansion of renewable energy in residential buildings will also reduce the greenhouse gas emissions that escalate forest fires, hurricanes and floods. Low-income, colored communities and indigenous communities are exposed to disproportionate climate impacts and need access to resilience technologies. If it is not ensured that lower-income households can take full advantage of the residential tax credit, historical injustices will be perpetuated, which ultimately determine which communities are able to adapt to the climate crisis.

To ensure that the direct payments for 25D are used effectively and fairly, we require a simple installation-based verification process to be set up with the Internal Revenue Service (IRS). In such a system, homeowners would provide the federal government with basic data and evidence of their solar or other renewable system installation, while the installer submits their own data separately, which the IRS can use to support the homeowner’s claim.

Overall, we are confident that the introduction of 25D direct payments will result in more LMI households switching to renewable energy in the coming years. This, in turn, will lower energy bills for those households who need it most, advance our environmental and climate justice goals, reduce greenhouse gas emissions, and create more well-paid jobs in communities across the country – building on an estimated 85,000 residential solar jobs in 2020. We urge you to include a direct payment option in the updated Senate Finance voting language and we stand ready to work with the committee staff to move this proposal forward.

Sincere,
Source: Senator Alex Padilla