This paper aims to explore the effect of the Investment Tax Credit policy on the production and usage of renewable energy resources in the United States and whether the implementation of this policy in the US helped close the gap with European Countries. It focuses largely on the economic theory of incentives, cost/benefit analyses, and the theory of externalities. To analyze this, data was collected from the World Bank and the Quality of Government Dataset and the effectiveness of this policy was measured using four outcome variables: Renewable Energy Consumption, Fossil Fuel Consumption, Renewable Electricity Output, and Greenhouse Gas Emissions. A difference in difference model was used to measure the impact of the policy before and after it was implemented in 2006. My initial findings found that the implementation of this policy did little to nothing in closing the gap between the US and European Countries in the production and usage of renewable energy resources, but there may have been an impact in the US alone
