Center for American Progress

The United States Must Lead on Clean Energy Investment

The United States Must Lead on Clean Energy Investment

The president’s American Jobs Plan proposes a suite of ambitious clean energy tax incentives that would help put the United States on a path to a 100 percent clean future.

Pine Tree Wind Farm and Solar Power Plant in the Tehachapi Mountains, California, March 2021. (Getty/Irfan Khan)
Pine Tree Wind Farm and Solar Power Plant in the Tehachapi Mountains, California, March 2021. (Getty/Irfan Khan)

It is time to build our future. President Joe Biden and Congress just proved that working together on major legislation is necessary, popular, and possible. The next need is a historic investment in economic recovery to deliver a stable climate; justice for pollution-burdened communities of color; and good American jobs. This requires so much more than just roads and bridges—it’s a clean electric grid, carbon-free schools, new world-leading manufacturing, and brand new, clean water pipes.

The president’s vision includes $2.3 trillion in direct federal spending and a suite of ambitious clean energy tax incentives that would add another $400 billion. This would be the biggest jobs package since World War II. If done right, it could dramatically shift the trajectory of global warming, putting the United States onto the path to a 100 percent clean future by midcentury.

The power sector tax proposals are one of the critical areas of investment backed by the president. In addition to proposals for direct spending and an energy efficiency and clean electricity standard that moves toward 100 percent carbon-pollution free power by 2035, the president calls for super-charged clean energy tax incentives. These include a 10-year extension of tax incentives for clean energy generation and storage, paired with incentives for strong labor standards.

As CAP identified previously, independent analysis from the Rhodium Group shows that this type of full-value, 10-year tax incentive package would transform the power sector, cutting air pollution, such as sulfur dioxide, by up to 84 percent in just five years and cutting carbon dioxide to 76 percent below 2005 levels in a decade. By itself, this set of power sector investment could double the share of clean electricity generation at the end of the decade, from as little as 34 percent to as much as 69 percent, flooding the economy with abundant, affordable, clean electricity; creating good jobs; and jump-starting a complete transformation.

In addition to the electricity generation incentives, the president is calling for:

  • Targeted tax incentives for critical new transmission lines, which would transform America’s electric grid
  • A tax incentive for the production of green hydrogen that could revolutionize American clean manufacturing
  • A tax incentive for direct air capture technology that could build the net-negative emissions capacity that will be needed to pull historical emissions back out of the atmosphere over the next century or more
  • Tax incentives for consumers to purchase electric vehicles; for manufacturers to retool factories and produce electric vehicles and their batteries; and for the installation of a national network of electric vehicle charging stations
  • Tax incentives for housing retrofits for energy efficiency and electrification (which should include the replacement of fossil fueled household appliances with modern zero-emission alternatives such as heat pumps)
  • Tax incentives for manufacturers to reinvest in American factories, retooling idled capacity to build the clean energy goods that will put the United States at the vanguard of an international transition to new technologies

All told, the high-impact clean energy tax incentives proposed by the president would amount to roughly $400 billion in federal investment, which is in addition to the more than $2.3 billion in direct spending enumerated in the president’s plan. This amounts to a significant investment in clean energy and will be an important component of the more than $4 trillion in total investment that the United States ultimately will need to meet our urgent climate goals.

Investing now to build a 100 percent clean future is not just urgent and important—it is imperative. This is the last best chance for Congress and the administration to set the United States on the right course.

Trevor Higgins is the senior director of Domestic Climate and Energy Policy at the Center for American Progress.

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Trevor Higgins

Senior Vice President, Energy and Environment