A popular renewable energy program that offers grants in lieu of a tax credit has produced few jobs while costing the government far more than initially anticipated, according to a new report from the House Energy and Commerce Committee.
The program -- created through Section 1603 in the 2009 economic stimulus law -- allows developers to claim a one-time cash payment instead of the usual renewable energy tax credits. It expired last year, prompting President Obama to urge its renewal.
But Republicans have characterized the program as part of a flurry of failed clean energy investments by the administration. In the report, Republicans charge that the program "treated job creation as little more than an afterthought" despite handing out what will eventually amount to $22 billion.
"The Section 1603 grant program was sold to the American people as a necessary stimulus jobs program, and yet, the Treasury and Energy Departments do not have the numbers to back up the Obama Administration's claims of its success in creating jobs," the report reads, later adding: "Despite the failure to create jobs, the Obama Administration now wants to double down on the Section 1603 program."
The panel's Republicans plan to release the report today at a hearing that will take aim at Obama's "green jobs agenda." Held by the Oversight and Investigations Subcommittee, the hearing will focus on renewable energy investment made through the American Recovery and Reinvestment Act (E&E Daily, June 18).
The 1603 program has increasingly become a target in the GOP narrative of the administration's failure to produce so-called green jobs, especially as the controversy over Solyndra winds down. The solar company infamously went bankrupt after it received a more than half-billion-dollar federal loan guarantee through another stimulus program.
But administration officials say that the 1603 program has spurred investment in renewable energy projects like wind and solar. DOE's National Renewable Energy Laboratory (NREL) found that the grant program supported between $26 billion and $44 billion in economic output over the course of its three-year life span.
The new GOP report focuses on the failure of the Treasury and Energy departments to count actual jobs created.
Instead, administration officials provided the committee with the NREL study that concluded the 1603 program helped create between 52,000 and 75,000 jobs per year from 2009 through 2011. Most of those were indirect jobs through supply-chain industries like manufacturing (Greenwire, April 9).
Republicans argue that such figures are misleading, since they are based on models and not on an actual count. They also point to the report's disclaimer that some projects might have progressed without a 1603 award.
The report further contends that the program is more expensive, despite beliefs that it simply fronts money that already would have been claimed in a tax credit.
It cites a Congressional Research Service study that found the program resulted in greater revenue losses than the pre-existing tax incentives. In total, the program resulted in almost $3 billion in federal revenue losses, double those of the production tax credit and investment tax credit, according to Republicans.
The 1603 program also has no limits on available dollars, approving a grant for any developer that qualifies. Republicans argue that that is too generous for a program they contend has so far resulted in fewer than 1,000 long-term jobs.
"Arguably, DOE and Treasury do the Section 1603 program a disservice so long as they fail to collect and report reliable jobs data," they wrote in the report. "In the current economic and budgetary climate, the Committee, and Congress as a whole, must refrain from serving as a rubber stamp for costly stimulus-related programs lacking a transparent and proven record on job creation."
Click here to read the Republican report.
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