Renewable energy coalition asks Congress for residential ITC direct pay option

More than 300 environmental justice advocates, environmental groups and renewable energy companies today sent a letter to the leaders of the Senate Finance and House Ways & Means committees, supporting a direct payment option for the property tax credit for residential energy efficiency ( 26 USC 25D). Congressional actions to make the credit repayable will allow underprivileged communities and lower-income households — who spend a disproportionately large portion of their income on energy — to access the economic, health and emissions benefits of clean energy.

Low and middle income (LMI) households have the least ability of all U.S. households to bear the cost of clean energy investments while waiting for federal incentives. It currently takes several years for LMI families with little to no tax liability to take full advantage of the existing Section 25D tax credits for the purchase of clean energy in homes, seriously undermining their effectiveness. Direct payment allows LMI families to receive their full grant in one year, providing great opportunities to expand rooftop solar to a more diverse group of families who want the benefits of distributed renewable energy, but a more equitable incentive structure to achieve this.

“A direct payment option for Section 25D would put high-street Americans on an equal footing with their higher-income and corporate counterparts, which is not only a fair and equitable thing to do, it’s one of the best decarbonization policies available,” the letter reads. “Encouraging households to reduce housing emissions empowers individuals to make a difference and would have a profound effect on the overall U.S. greenhouse gas emissions profile.”

An independent report recently released by RAND found that inequality with the current housing tax credit could be improved by making the credit repayable, also known as direct payment. Direct payment for 25D would help deliver energy savings for families in every zip code in the country, while also creating hundreds of thousands of new jobs and supporting small businesses. As the Senate and House of Representatives consider expanding and amending several energy-related tax provisions, the letter’s signatories are calling on members of Congress to include a direct-payment or similar cash-payment program for residential energy properties.

“Black families and entire communities may be left behind in the clean energy transition, missing out on the benefits of healthier, more resilient homes and increased income to build wealth,” said Ajulo E. Othow, Esq., Chairman of the Leadership Council at Black Owners of Solar Services (BOSS). “Section 25D direct payment is a simple, yet incredibly impactful way to promote greater equality and remove barriers to access to renewable energy, which will make a difference to all of us.”

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