Cantwell: Senate Must Extend Critical Clean Energy Incentive Program
With colleagues, says her vote on tax legislation may depend on inclusion of Treasury Grant Program WASHINGTON, DC – Today, U.S. Senator Maria Cantwell (D-WA) joined with 16 Senators in calling for an extension of a clean energy grants program as part of tax legislation being debated in Congress. In a letter to Senate Majority Leader Harry Reid and Senate Finance Committee Chair Max Baucus, the Senators wrote that they “will have difficulty supporting tax legislation currently being drafted for Senate consideration that fails to include an extension of the Treasury Grant Program.”
The Treasury Grant Program (TGP) provides cash grants in lieu of existing tax credits for renewable energy projects built in the United States. It has been widely credited with maintaining strong growth in the renewable energy sector in 2009 and 2010, despite the severe economic downturn. The program is set to expire at the end of the year, which would mean the loss of tens of thousands of jobs in the wind and solar industries and cause billions of dollars of clean energy projects to be mothballed. Cantwell is fighting for her amendment that would extend the TGP through 2012 and expand the program to allow public power providers to participate. The tax package deal negotiated between President Obama and GOP leadership did not include an extension of this vital program.
“The projects financed through Treasury Grants not only create thousands of jobs, they set America on a path toward leadership in one of the most important growth sectors in the global economy – clean energy,” Senator Cantwell said.
The TGP, also known as the “Section 1603 program,” was created as a part of the 2009 American Recovery and Reinvestment Act in response to the economic meltdown, which has prevented utilities from using existing production and investment tax credits for clean-energy development. The TGP is one of the most successful provisions in the stimulus package. To date, TGP has supported around $18.2 billion in clean energy investment and built 8,600 megawatts of renewable energy generation.
A two-year extension of the TGP would result in nearly 65,000 more jobs in the solar industry alone, and enough additional solar to power more than 1.2 million homes. Continued federal policy support for geothermal energy, including a TGP extension, would lead to the creation of 11,200 jobs. TGP will also help maintain strong growth in the wind manufacturing industry. Extending TGP is projected to increase wind project installations by roughly 50 percent each year, creating 20,000 new jobs.
The letter sent today was addressed to Senate Majority Leader Harry Reid and Finance Committee Chairman Max Baucus. The letter was also signed by Senators Dianne Feinstein (D-CA), Patty Murray (D-WA), Mark Udall (D-CO), Mark Begich (D-AK), Chris Coons (D-DE), Barbara Boxer (D-CA), Ron Wyden (D-OR), Tim Johnson (D-SD), Patrick Leahy (D-VT), Ben Nelson (D-NE), Chris Dodd (D-CT), Sheldon Whitehouse (D-RI), Tom Udall (D-NM), Robert Menendez (D-NJ), Jeff Merkley (D-OR), and Byron Dorgan (D-ND).
Below is the full text of the letter sent today:
December 9, 2010
The Honorable Harry Reid The Honorable Max Baucus
Majority Leader Chairman
United States Senate Senate Finance Committee
Washington DC 20510 Washington, DC 20510
Dear Majority Leader Reid and Chairman Baucus:
We are writing to express that we will have difficulty supporting tax legislation currently being drafted for Senate consideration that fails to include an extension of the Treasury Grant Program (TGP). The Treasury Grant Program allows renewable energy developers to claim tax incentives directly. It is rightly credited with maintaining growth in the renewable energy sector in the midst of an economic downturn. If Congress allows taxes to rise on renewable development, momentum would be lost and the growth of renewable energy would be jeopardized.
The TGP has supported around $18.2 billion in clean energy investment to build 8,600 megawatts of renewable energy generation so far. To date, 1,465 projects have come online nationwide, and hundreds more have broken ground. As a result, our nation is slowly weaning itself off imported fuels, cleaning our air, reducing greenhouse gas pollution and creating jobs. In recent years the success of TGP has led to the creation of more wind energy capacity than any other type of power generation.
Furthermore, without the TGP, banks are able to extract a significant portion of the renewable energy tax credits’ value from renewable energy companies. A grant or direct pay program gives renewable energy companies 100% of the government support, instead of diverting much of the value into the already deep pockets of big banks.
The impact of this program on the clean energy economy has been enormous. A study by Lawrence Berkeley National Laboratory found the wind energy projects that were made possible by the TGP were responsible for more than 55,000 jobs. Another study by EuPD Research, an independent consulting firm, projects a two-year extension of TGP would mean 65,000 more jobs in the solar industry and enough energy to power 1.2 million homes.
Before the economic meltdown, developers were able to form “tax equity partnerships” with Wall Street banks to take advantage of clean energy tax incentives. But the banking crisis meant the $8 billion tax equity market seized up. The Treasury Grant Program is the only reason the renewable energy industry expanded instead of freezing.
Unfortunately, without the TGP or the creation of a direct payment option as proposed by Senator Baucus in the Middle Class Tax Cut Act of 2010, renewable energy development is forecast to dramatically suffer in 2011. A survey of all the leading banks that dominate the tax equity market shows that an expiration of TGP would result in a 56 percent decline in total financing available for renewable energy this coming year.
As you know, the TGP did not create a new federal incentive program. Instead, it allowed clean energy projects to make use of existing investment and production tax incentives. We ask for you to add an extension of the Treasury Grant Program, as proposed in the Renewable Energy Incentive Act, or the direct payment option as proposed by Senator Baucus in the Middle Class Tax Cut Act of 2010, to the final tax legislation considered by the Senate.
Thank you in advance for recognizing the urgency of growing the green energy economy.
Senators Maria Cantwell, Dianne Feinstein, Patty Murray, Mark Udall, Mark Begich, Chris Coons, Barbara Boxer, Ron Wyden, Tim Johnson, Patrick Leahy, Ben Nelson, Chris Dodd, Sheldon Whitehouse, Tom Udall, Robert Menendez, Jeff Merkley, Byron Dorgan
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