Green federal tax credits impact on US housing prices

Purpose The purpose of this study is to investigate whether increases in homeowner green amenities occurred because of income tax credits to the degree that changes in housing prices are measurable. Are higher incomes, lower mortgage rates and green income-tax credits impacting housing price changes? Design/methodology/approach The paper uses the least-squares regression model with natural log specifications. The log of income and a dummy variable, which was assigned to the Energy Policy Act (2005) and the American Recovery and Reinvestment Act (2009) coverage dates are used as independent variables. Two regression models were examined using monthly housing price data from January 1990 through the year 2018. The first regression model used a single dummy variable for credits available under the Policy Act of 2005 and the Recovery Act of 2009. The second regression model considered the credits granted under these two laws separately. Disposable income per capita impacts demands for housing while green upgrade expenditures affect the cost of housing. Findings The laws set low credit limits of $500 followed by $1,500 but because of the multiplier effect, the spending appears to have magnified and been much higher. The credit availability variables have positive coefficients and were significant at 1 per cent. This implies that single-family housing prices were sensitive to the existence of residential energy property income-tax credits. The R2 results were 0.93 or above for both models. Research limitations/implications The data used was aggregated and publicly available online. Many studies use aggregated macroeconomic data when modeling housing prices using the exogenous variable of disposable income but there is no substitute for examining individual homes by location and their sales price to see under what conditions green income-tax credits have the most impact. There could be demographic issues that are missed when using aggregated information. Practical implications Spending on heating/cooling systems, dual pane windows and other green amenities keeps the housing stock modernized and housing prices steady or rising. An additional benefit is that spending motivated by self-interest can simulate household consumption spending. Houses deteriorate due to wear and tear. Physical-repairable depreciation represents a situation where maintenance funds are continuously needing to be spent. Repairs and upgrades to the structure of the property keep its price stable by stopping the physical depreciation that would otherwise occur with the passage of time. Social implications The paper provides support for the idea that residential green amenity upgrades positively impact the value of a house. These green-amenity upgrades, which other research studies have suggested should be included explicitly in the appraisal process, are a major characteristic of a property when a price estimate is being done. Housing being sold should have a section on the information sheet noting the property green upgrades that exist and an energy efficiency score should be assigned to each house listed for sale. Originality/value There are few (if any) academic research papers studying the impact of green tax credits available under the Energy Policy Act (2005) and under the American Recovery and Reinvestment Act (2009). The degree to which green income-tax credits stimulate spending on housing has not been addressed by researchers. This paper is an initial research attempt to quantify whether these legislative efforts measurably encouraged homeowners to adopt newer, greener technologies.

Renewable Energy Sources in Iran: Policy and Regulation

According to the Fifth Five Year Development Plan, in Iran, renewable resources, under the green horizon scenarios, must provide 5,000 MW of electricity. Among different types of renewable source of energy, there is no shortage of information in Iran, which is located near to zero line (earth’s equator), with about 300 clear sunny days in a year, about setting policies promoting solar energy. Taking into account the availability and benefits of solar energy for Iran, this paper has focused on solar energy.Recent statistics show that, if the current development plans proceed, the capacity of the installed renewable energy systems would reach 2.8GW by 2030. This requires more than 2800 million US dollar investment in 20 years, i.e., 2010 to 2030. Despite the advantages of using solar energy, such as reducing greenhouse gases, it is important to note that solar power is 2.5 to 5 times as expensive as electricity from existing conventional power sources, such as coal and other sources. In order to encourage people to use solar power, there is a need to change our laws and establish an integrated energy regulation, involving tax policy mechanisms to support the deployment of solar energy in Iran. As Iran is dependent upon its fossil fuels, the transition from fossil fuels to renewable, which is a worldwide goal to reduce GHG or CO2 emissions, requires the adoption of a comprehensive policy and integrated regulation nationwide, taking a multidisciplinary approach. This paper exemplifies and considers the 2005 Energy Policy Act and Investment Tax Credit (ICT) for residential energy property, illustrating how solar-energy-regulation could contribute to the sustained development of solar energy. The main purpose is to help the development of sustainable solar energy regulation in Iran.