Due to expire at year-end, a coalition made up of more than 750 clean energy companies, small businesses and other organizations on Nov. 30 sent a letter to Congress calling for legislators to extend the Treasury Dept.’s Section 1603 grant program for another year. The signatories represent organizations employing hundreds of thousands of Americans in the growing, increasingly diverse clean energy economy from all 50 states.
Enacted in 2008, the Treasury 1603 grant program allows companies that invest in and develop clean energy projects to receive a cash grant in lieu of investment tax credits that would have increased their net income over a period of subsequent years. Front-loading and monetizing these investment tax credits has provided critical cash flow to these companies as they have struggled to recover from the collapse of the tax equity market that began with the 2008 economic crisis.
Treasury 1603 & Clean Energy Growth
The “1603 Coalition” summarizes the effectiveness of the program in its letter to Congress. Highlighting the “resounding success” of the program, the letter states, “Since its enactment, the program has leveraged over $22.8 billion in private sector investment to support over 22,000 projects utilizing a wide range of energy technologies in all 50 states.
“This has resulted in thousands of new American jobs…[It] allows taxpayers and small businesses to maximize the return and value of existing energy tax incentives, and is technology neutral so it encourages the development of a wide variety of domestic energy technologies.”
An independent study conducted by EuPD Research for the Solar Energy Industry Association (SEIA) determined that extending the Treasury 1603 grant program through 2012 would result in the creation of an additional 37,000 jobs in the solar energy industry alone in 2012, a 12% increase over baseline. Added cumulative capacity of clean, renewable solar power installed through 2016 would be 2,000 megawatts over baseline, enough to power 400,000 homes.
The letter also spells out the likely implications of Congress allowing it to expire on Dec. 31. “A July 2011 survey of the major tax equity investors by the U.S. Partnership for Renewable Energy Finance estimates expiration of the program would shrink the total financing available for energy projects by 52 percent in 2012. This would stifle job creation and severely restrict the market’s ability to leverage private sector capital to finance new domestic energy projects,” the letter states.
Fighting for the Future of Clean Energy in the US
Clean energy industry execs are lobbying for their companies’ competitiveness, in some cases survival, playing against a house deck still stacked heavily in favor of fossil fuel production and consumption. Industry and business leaders representing solar, wind, biogas, combined heat and power (CHP) and fuel cells all came out with public statements calling for the extension of the Treasury 1603 grant program to help them compete on a more level playing field.
They’re not alone. A nationwide poll conducted by Kelton Research showed that just shy of 9 out of 10 Americans (89 percent) think it’s important for the United States to develop and use solar energy.
As Rhone Resch, president and CEO of the Solar Energy Industry Association (SEIA) stated in a news release, “The 1603 program was the single biggest driver of renewable energy deployment over the last two years, leveraging nearly $23 billion of private sector funding. Allowing it to expire at the end of the year, while tax equity markets remain limited, would have a severe impact on the few industries actually creating new American jobs in this economy.”
Clean energy critics will slam this latest effort as another call to subsidize businesses that aren’t, and will never be, economically sustainable. Balderdash! An oil and fossil fuel industry oligopoly, including the most profitable companies in world history, continues to enjoy the benefits of even greater tax credits and subsidies. furthermore, federal, state and local governments have historically played central, seminal roles in US economic development by channeling private sector investment into specific areas, as well as creating demand directly.
Misinformation, disinformation and fundamentally flawed research and analysis have been used to discredit government clean energy support programs. The Treasury 1603 grant program has become a high-profile target of late.
The results of the Treasury 1603 grant for tax credit program to date, along with others like it, speaks for itself, however. Clean energy has been a bright spot in a predominantly moribund US economy in recent years. Business investment, public demand and job creation have continued to grow well above the overall economy despite the near collapse of the global financial system, a global recession and ongoing deleveraging by banks and other lenders.
Clean Energy Sector Growth & Development: A Stark Contrast
In contrast to other prominent sectors of the US economy, competition in the US clean energy industry sector has intensified along with growing use and adoption – a vital sign indicating the vigor and robustness of a developing industry and market that’s been lacking in the US, particularly when it comes to good job creation here at home.
Some 93,500 Americans worked in the US solar industry in 2010, and more than half of the country’s solar companies are planning to expand hiring in 2011, according to The Solar Foundation’s “National Solar Jobs Census.”
Looking across the board – be it wind, solar, geothermal, waste-to-energy, biogas, fuel cells, hydro or marine power, a veritable tidal wave of innovation and socially, environmentally beneficial and productive economic activity is being unleashed. Costs have been declining, the performance and efficiencies of technology and businesses have been increasing and job creation continues to grow along end user demand.
With ongoing private sector clean energy investment and advancements, as well as the possibility of stronger, more proactive government policies, there will come a day when there will be no justifiable need to extend the Treasury 1603 grant program. This year isn’t that time, however. By refusing to extend the Treasury 1603 grant program, our Congressional representatives are threatening a growing, maturing US economic sector that’s been one of the few economic bright spots in the US economy in the past decade, as well as one that’s likely to become a key economic growth engine over the decades to come.
I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.