$2.3 Billion in Tax Credits for Clean Energy Manufacturing Sector

President Obama unveiled a program Friday that will provide $2.3 billion in tax credits for the clean energy manufacturing sector, a move aimed at creating 17,000 jobs.

The funding, which comes from the $787 billion American Reinvestment and Recovery Act, has been awarded to 183 projects in 43 states, the White House announced.

“If we harness ingenuity, take the talent of our workers and innovators, and we invest in it, we’ll forge a future where life is better in our country over the long run,” Obama said.

The projects selected must be commissioned by February 2013, and the government expects about one-third of those will be completed this year. The program provides a 30% tax credit for those projects.

The credit is focused on U.S. manufacturing of clean energy technologies such as solar and wind. Obama has said he wants to double the amount of renewable energy the United States uses over the next three years.

In addition to the federal funding, private firms are investing $5.4 billion, which will create 41,000 more jobs, the White House said.

Obama noted the United States spearheaded solar technology, but fell behind Germany and Japan in production, and that most of the batteries used here are made in Asia.

“This will help close the clean energy gap between America and other nations,” the president said.

David Kreutzer, energy economist at the conservative think tank Heritage Foundation, was skeptical about the program’s ability to boost the labor market.

“It runs back to the notion that government spending will create jobs, but to do that truly you need people to [generate] more money than their work costs,” he said.

How the winners were chosen

The White House said it received 500 applications from companies seeking a total of $7.6 billion in aid by the program’s Oct. 16 deadline. The departments of Energy and Treasury reviewed the applications, and sent their selections to the Internal Revenue Service to award the credit.

The applications were screened for a variety of factors, including job creation potential, technological innovation and geographical diversity. The new facilities should also boost the export of U.S. manufactured clean energy products, the government said.

Advantage was given to “shovel-ready” projects — those that have state and local permits in place and are ready to go, senior officials said.

Kreutzer said the initiative’s focus on a particular sector is flawed, and he suggested that if these manufacturing facilities can only get started with government subsidies, they will fail when the funds run out.

“It’s a government program to pick winners and losers, and we need a broader, overall view,” he said. “Lower taxes, not higher subsidies — lower energy costs, not more windmills.”

Some of the funds will go to companies with headquarters outside the United States, but the money must be committed to building U.S. facilities and creating domestic jobs.

Some of the facilities that qualified for the tax credit include manufacturers that will produce plug-in electric vehicles, geothermal equipment, fuel cells and microturbines.

The announcement came after a government report released earlier Friday showed employers cut 85,000 jobs in December, a much worse report than economists expected. The unemployment rate held at 10%.

“We have to continue to explore every avenue for recovery, and the [stimulus] has been a major force in that trajectory,” Obama said.

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