Tax cuts, renewable energy grants attract unlikely allies

They might seem like strange traveling companions, but solar power companies and chemical manufacturers are riding the same bandwagon to urge Congress and the Obama administration to expand tax cuts and grants for clean energy.

The push in the past two days has corresponded nicely with Tax Day. With health care reform in the rearview mirror and talk of more economic stimulus bills around the bend, industries are going hat in hand to Congress for extensions of tax credits and government financing programs that could run out this year.

Wind and solar energy companies are desperate to maintain subsidies they say are needed to carve out a permanent place in the U.S. economy. Heavy industries, such as Dow Chemical Co., are looking for help retooling factories to shift some of their business to clean energy technology.

Two programs created by the 2009 economic stimulus package, the clean energy manufacturing tax credit and Section 1603 grants for renewable projects, are at the center of discussions. Since the departments of Energy and Treasury began administering the programs, hundreds of individual projects or companies have accessed the government's largesse.

Obama administration officials, along with industries that have benefited, tout the programs as big job creators, and according to DOE, they have created thousands of jobs. But in a political atmosphere colored by tea party protests, Congress battles perceptions among conservative Americans that the stimulus funding has not created jobs, even as companies press for expansions of the government financing programs that they say will yield concrete clean energy jobs growth this year and next year.


"The competition for these funds was oversubscribed 3-to-1 in competitive projects," said Matt Rogers, head of DOE's stimulus funding program, referring to the manufacturing tax credit.

Grant program made solar industry shine in '09

The Treasury Department had anticipated that it would distribute about $3 billion in renewable energy grants by the end of 2010. Treasury has already surpassed that figure. Companies ate up the $2.3 billion clean energy manufacturing tax credits quickly, and the administration has requested another $5 billion in its fiscal 2011 budget.

Wall Street has not fully recovered, according to the solar industry's top trade group. If it wasn't for the grant program, which pays companies upfront cash in lieu of tax credits, the industry in 2009 would have been held hostage to a banking sector that had frozen tax equity lending.

Rhone Resch, president of the Solar Energy Industries Association, yesterday called the Treasury program "instrumental in spurring industry's growth" and urged Congress to extend the program beyond this year. It expires at year's end.

By February, 182 solar projects had received Treasury grants totaling $81 million, which helped attract nearly $300 million in additional financing. The grant program "reduces the need for tax equity partners and significantly lowers the transaction costs for a solar project," the industry said in a report issued yesterday.

"The combination of the 48C program and 1603 renewable generation payments has put the United States on a path to doubling high-technology clean energy manufacturing and renewable generation capacity by 2012," Rogers said. "These programs are bringing private capital off the sidelines and back into the clean energy financing markets."

Chemical industry wants tax credits expanded

The manufacturing tax credit has been just as popular. Yesterday, the American Chemistry Council (ACC), a powerful Washington-based industry group that represents the nation's largest chemical manufacturers, urged Congress to expand the so-called 48C program.

"Policies that drive expansion of low-emission industrial technologies and clean energy innovation are important elements of any national greenhouse gas emission reduction policy," said the ACC.

"ACC fully supports the effort to encourage investment in energy efficiency and re-tooling for clean energy manufacturing via programs such as a manufacturing revolving loan fund, expansion in the 48 (c) advanced energy manufacturing tax credit, and other tax incentives," it said.

Officials from the trade group said Dow Chemical, for example, has used the manufacturing tax credit to encourage the development of an advanced auto battery that will make use of clean energy technology. The credit has also been of use in Dow's development of solar shingles. The profitability remains uncertain, but the tax credit has gotten the manufacturing off the ground.

Chemical companies are an active player in a group of major industry trade organizations pushing for industry-friendly policies in energy and climate change policy being crafted in the Senate. The ACC, while mentioning its interest in additional tax credits, said Congress should take the lead on any climate-related policy ahead of pending U.S. EPA regulations under the Clean Air Act to reduce greenhouse gas emissions.

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