Which policy action is designed to influence the energy mix toward renewable sources?

• A. Production tax credits for renewables.
• B. Tariffs on imported oil only.
• C. Eliminating all subsidies for energy.
• D. Increasing the payroll tax rate.

Answer: (A)

Policies that shift the energy mix toward renewables rely on targeted financial incentives that improve the economics of clean energy. Production tax credits for renewables provide a tax credit for each unit of electricity produced from renewable sources. This directly lowers the after-tax cost of building and operating renewable projects, making them more financially attractive relative to fossil fuels. As more wind, solar, and other renewables come online, their share of total energy production rises, effectively guiding the energy mix toward cleaner sources.

Tariffs on imported oil raise the price of a fossil fuel, which can influence demand in the short term but doesn’t create a direct incentive to expand renewable capacity. Eliminating subsidies for energy would remove incentives across the board, not specifically promote renewables. Increasing the payroll tax rate is unrelated to energy sources and their deployment.