By Barbara Kessler
Green Right Now
In recent days, both the wind power and solar power advocates have been protesting the potential expiration of three key tax incentives that have helped drive the expansion of renewable energy in the US, even amid the economic stall out.
Those tax incentives are:
- The Production Tax Credit (PTC), a tax credit based on kilowatts, which the wind industry credits for keeping its sails afloat over the past two years.
- The Investment Tax Credit (ITC), which allows investors to take a 30 percent tax credit on an eligible project.
- The 1603 Treasury grant program, which offers investors a grant equal to one-third of the value of a completed project, in lieu of the ITC.
With Congress and President Obama both seeking ways to trim the federal budget deficit, and the tug of oil and coal money ever-present on Capital Hill, these incentives for clean energy are being considered for the axe.
Many believe renewable power can succeed without them. However, history tells a different story. Each time one of these incentives has lapsed, investment in renewable power has deflated faster than yesterday’s party balloons.
Why? Because renewable power remains a fledgling part of the energy pie, providing less than 10 percent of the power to the grid nationally.
Wind and solar power, while much-discussed, remain a sliver of the energy markets and are therefore riskier, relative to established coal, oil and gas markets, though one could argue that is changing as more people realize the promise and durability of renewable energy. (People like Warren Buffett, who just increased his stake in the solar industry, and whose Mid-American Energy Co. is a major reason Iowa now gets 20 percent of its power from wind.)
Looking around the globe, many other markets and political leaders in Germany, China and Great Britain recognize that renewable energy can provide not just greater future growth, but growth in the right direction, away from polluting, finite sources of energy.
If the US lets these clean power sectors wither in the name of austerity budgeting, it will make the nation less competitive globally and slow its progress toward domestic energy security. It will short-circuit the manufacturers who’ve set up dozens of facilities in the US to service these industries and fumble an opportunity to leverage the private investment that makes these tax policies a relatively good buy for taxpayers — as Rep.Earl Blumenauer, D-Portland, points out in a recent article in the National Journal.
“Federal energy tax incentives assure the deployment of American clean energy at a time when competitors like China and Germany are aggressively expanding manufacturing, research, and deployment of these technologies. Beyond providing direct support for renewable energy manufacturers, programs like the production and investment tax credit and the 1603 Treasury Grant Program help clean energy companies leverage millions of dollars in private investment as well. Since its enactment, for instance, the 1603 program alone has leveraged $22.8 billion in private-sector investment for 22,000 projects in all 50 states across the clean energy industry.”
Blumenauer notes that in 2010, “wind-related manufacturing employed roughly 20,000 people and the industry supported 75,000 direct and indirect wind-related jobs across the country. More than 100,000 Americans work in the solar industry, double the number since 2009.”
Both the American Wind Energy Association and the Solar Energy Industries Association predict steep drop offs in jobs, if the investment credits are not renewed. AWEA released a report Monday that jobs in direct wind generation (as opposed to manufacturing) could be cut nearly in half, down to around 40,000 from nearly 80,000 currently.
In this time of need, the political winds should tack with those jobs, not against them.
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