If the alternative energy sources are even more expensive, then yes, it makes complete economic sense for me to invest in this because it yields a positive return.

All you've done with this example is try to say that X is better than (X + tax), failing to identify the actual benefits and tradeoffs derived from the tax. Please at least try to be somewhat intellectually honest.

Right, but Homo Economicus doesn't really exist, and just because an action is "rational" from a purely economic standpoint, it doesn't mean that action will be taken by an actual living person. Disincentives sometimes have demotivating factors beyond their purely economic impacts.

When people are discussing economics within the framework of economic theory, it's a bit silly to invoke "Homo Economicus doesn't exist" this far down the thread in some apparent attempt to discredit one side.

I disagree, painting policy issues with a simple brush of "calculate X & Y and see which is bigger" completely ignores the behavioural components at play. Homo Economicus might respond to financial incentives as expected, but in the real world they can motivate (or demotivate) in ways that aren't captured in those calculations.

My point is that you seem to be applying your argument selectively. This whole thread is about "Homo Economicus".

Disagree again, GP's comment was specifically reframing the conversation around an individual's actual ability to respond "rationally" in a real-world situation.

I'd honestly be shocked if people with the means and interest to put in a solar panel system would care whether they made their money back in 8 or 25 years.

Why wouldn’t many of them care? The alternative investment for many people with means is the stock market. If I can make my money back on solar in 8 years, that’s roughly comparable to the long-run stock market returns, so it costs me little to sell $30K in stocks, buy a PV system, and feel like I’m doing something concrete to get cleaner energy.

Cut that return to a third of its previous value and I’ll leave my money in stocks and just buy electricity made from natural gas.

Most people don't try and min max every facet of their life. If it eventually returns on their investment relative to dirty energy, they are happy. There's also people who are given the option on their utility bill today to pay extra for renewably sourced energy, and they do it. People put up solar panels in Cleveland where its sunny for 80 days a year, they aren't getting a great ROI but they do it anyhow.

There are non-financial benefits to having solar panels, such as the peace of mind in knowing your home largely runs on clean energy.

Agreed (and acknowledged above). I just think there are more people willing/able to pay a full lifecycle net price of $0 for that peace of mind than are willing/able to pay $20K for it.