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Small wind turbines and rooftop solar panels are a highly attractive energy option, capable of generating clean, renewable power without the need for transmission lines across vast stretches of rural land. State and federal incentive programs have made these devices increasingly affordable for landowners in recent years, generating an unprecedented level of interest in “distributed” renewable energy.Unfortunately, small wind turbines and solar panels are often far less attractive in the eyes of neighbors, who fear that the systems will erode neighborhood aesthetics and property values. Despite aggressive state and federal programs aimed at promoting renewable energy systems, land use controls at the local level often discourage landowners from installing the devices. To combat this problem, statutes in a growing number of states invalidate local restrictions on distributed renewable energy. These broad preemptive statutes overcome neighborhood barriers, but they also suppress local participation in land use regulation and ignore community-specific issues and concerns.This article analyzes conflicts between states and communities over land use laws that restrict distributed renewable energy. Framing these conflicts as clashes over scarce “entitlements” to regulate, the article explores the possibility of using liability rule-like approaches to more efficiently allocate these entitlements between states and local governments. Based on the analysis, the article advocates a scheme that would offer “Green Community Tax Credits” to landowners in communities that voluntarily accommodate distributed renewable energy in their land use controls. The tax credit system would strengthen incentives for communities to allow distributed renewable energy but would permit each community to weigh its own unique costs and decide the issue, promoting more flexible and efficient policymaking.



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