'Green' energy a tiny share of stimulus plan
Supporters see the plan's $24 billion on renewables as a first step toward a new energy economy.
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The problems extend to the wind industry. On the heels of banner growth in 2008, turbine-tower manufacturer D.M.I. Industries this month laid off 20 percent of its factory work force in Oklahoma and North Dakota, as well as Ontario, Canada. Without aid, 25 to 50 percent of planned wind-power capacity won’t be built this year, the American Wind Energy Association warns.Skip to next paragraph
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Convert credits to cash?
The most crucial piece involves tax credits. In the past, investment banks and other deep-pocketed investors could spend huge amounts on wind farms and other renewable-energy projects and then reap production tax credits, which they could use to offset taxes on profits elsewhere. But the severe economic downturn has reduced profits and the number of major renewable-energy investors from 20 to about five. Thus, the tax credits are far less valuable than they were.
So, wind and solar industries want essentially to convert those tax credits into grants from the US Department of Energy. In legislation last week, the House version of the stimulus bill allowed the switch; the Senate version did not.
“A couple of things in the House measure are going to alarm fiscal conservatives – and one of those is loan guarantees being replaced by explicit payments,” says Kevin Book, vice president for energy policy, oil, and alternative energy with FBR Capital Markets. “If Congress approves this, it absolutely will have investors looking at this as a green light” to invest in green-energy projects, he says.
In other areas, the House and Senate are in lock step. Both would provide $13 billion to extend the important “production tax credit” for wind power for another three years. Without it, credits would be unavailable for projects not completed by the end of this year.
Another provision in both bills is a 30 percent investment tax credit that had been given only to solar and will now be extended to wind, biomass, geothermal, hydropower, and landfill gas. That would enable the latter projects to get a tax credit in just one year rather than a production tax credit over 10 years.
Some $8 billion from the Department of Energy would also be available for loan guarantees for clean-power projects. But it’s not yet clear if those projects must be “advanced” and “innovative.” If not, this could give a boost to wind and solar.
Such a boost would be key to achieving the president’s goal of doubling renewable-energy capacity nationwide within three years. Much of that plan is yet to come in an expected energy bill. And there is reason to believe the jobs Obama wants to see can indeed be created, experts say.
“The stimulus package would turbocharge our efforts to use energy more efficiently and build more renewable electricity facilities,” says Daniel Weiss, director of climate strategy at the Center for American Progress, who has analyzed the stimulus provisions.
Wind, solar employ 80,000
Together the wind and solar industries employed about 80,000 workers last year, barely a blip in a US labor force of 154 million. Sales of renewable-energy equipment reached $25 billion – tiny in terms of the overall economy, but more than double renewable energy’s level four years ago.
A big part of the growth was the wind industry. It added the equivalent of eight coal-fired power plants and 65 new manufacturing facilities nationwide – along with 10,000 jobs in the past two years.