New Incentives Make 'Going Green' Easier

Thanks to new tax credits that kicked in this year and increasingly competitive prices on energy-efficient appliances, a homeowner can take advantage of breaks that may help trim utility bills.
By: Kelli B. Grant: The Wall Street Journal Online
It's getting easier - and cheaper - to be green.

Thanks to new tax credits that kicked in this year and increasingly competitive prices on energy-efficient appliances, it's easier than ever to boost your home's energy efficiency without going broke. Under the Energy Policy Act, in 2006 and 2007 consumers can receive federal tax credits for making energy-efficiency upgrades to their homes.

"Energy efficiency is a good deal unto itself, but these tax credits are offering some special opportunities to get a financial boost," says Bill Prindle, deputy director of the American Council for an Energy-Efficient Economy, or ACEEE, a Washington, D.C.-based nonprofit that advocates energy efficiency.

The credits don't apply to just any energy-efficient upgrade, however. And there are requirements and limits that must be met.

What's Covered

You can get a one-time tax credit of up to $500 for projects that involve the home's shell - insulation, windows, sealing - or its home heating and cooling equipment.

Eligible projects include new windows (10% of the cost, up to a credit of $200), central air conditioners (up to $300 of the full purchase price), hot-water boilers (up to $150 of the full purchase price) and pigmented metal roofs (10% of the cost, up to $500).

You also can get a one-time tax credit for the cost of installing an alternative energy system. For installing a photovoltaic system (which produces electricity) or a solar water heating system, you'll receive a credit for 30% the cost of the system, with a maximum of $2,000.

All of these projects must meet specific criteria. And they must be put in place during 2006 or 2007.

Get Some Money Back

Most appliances - including dishwashers, dryers and refrigerators - aren't eligible for the federal tax credits. But you still may be able to save, given that many states, cities, utility companies and even appliance makers offer rebates and coupons for energy-efficient products.

In Montana, for instance, the Bonneville Power Administration offers $6 coupons that can be redeemed for energy-efficient compact fluorescent light bulbs.

The WARMAdvantage program of New Jersey Natural Gas offers customers rebates for buying high-efficiency equipment: $300 for a furnace or boiler, and $50 for a water heater. Other states have programs for free online energy audits and for weatherization for homes of low-income residents.

You can view rebates and other programs at the Web sites of Energy Star (www.energystar.gov), a government-backed program dedicated to improving energy efficiency; the ACEEE (www.aceee.org); and Consumer Reports' Greener Choices (www.greenerchoices.org), a consumers' guide that focuses on environmentally friendly products.

Price Drop

Making it even more enticing to buy energy-efficient products is the fact that they are no longer a much more costly alternative to their energy-loving counterparts.

Significant strides have been made over the past 10 years, says Carolyn Forte, home-care director for the Good Housekeeping Institute. The cost of many energy-efficient products is comparable to those that aren't energy efficient. Often, the pricier models simply have fancy bells and whistles.

When shopping for an energy-efficient model, look for the Energy Star label, which tells you the appliance meets set energy-efficiency standards, says the ACEEE's Mr. Prindle. The tag is currently found on more than 40 products, from refrigerators and washers to TV sets and computers.

Even if you're not in the market for a new appliance, there's plenty you can do to increase energy efficiency without spending much money, says Urvashi Rangan, a senior scientist and policy analyst at Greener Choices. To boost your existing heating system, she advises replacing any analog thermostats with programmable ones.

Other options: Caulk windows. And buy an inexpensive jacket to insulate an old hot-water heater to prevent energy from escaping.