TY  - JOUR
AU  - Metcalf,Gilbert E.
TI  - Investment in Energy Infrastructure and the Tax Code
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15429
PY  - 2009
Y2  - October 2009
UR  - http://www.nber.org/papers/w15429
L1  - http://www.nber.org/papers/w15429.pdf
N1  - Author contact info:
Gilbert E. Metcalf
Room 3221
Department of the Treasury
Washington, DC 20220
1500 Pennsylvania Ave., NW
Tel: 202-622-0173
E-Mail: gilbert.metcalf@tufts.edu
M1  - published as Gilbert E. Metcalf. "Investment in Energy Infrastructure and the Tax Code," in Jeffrey R. Brown, editor, "Tax Policy and the Economy, Volume 24" The University of Chicago Press (2010)

M3  - presented at "Tax Policy & the Economy", September 24, 2009
AB  - Federal tax policy provides a broad array of incentives for energy investment.  I review those policies and construct estimates of marginal effective tax rates for different energy capital investments as of 2007.  Effective tax rates vary widely across investment classes.  I then consider investment in wind generation capital and regress investment against a user cost of capital measure along with other controls.  I find that wind investment is strongly responsive to changes in tax policy.  Based on the coefficient estimates the elasticity of investment with respect to the user cost of capital is in the range of -1 to -2.  I also demonstrate that the federal production tax credit plays a key role in driving wind investment over the past eighteen years.
ER  -