Growth in renewables manufacturing is about to slow, and thousands of jobs will be lost, if Congress doesn’t level the playing field between renewables and traditional fossil energy sources, renewables advocates told the National Hydropower Association conference April 18 in Washington DC.
The wind, hydro and solar industries are all facing expiration of tax benefits that have allowed them to grow during the recession. Though the specific tax provisions vary, said NHA Executive Director Linda Church Ciocci, “We’re all in the same boat, and we sink or swim together.”
“We’re a bright spot” in the economy, said Denise Bode, CEO of the American Wind Energy Association. “We’re the job creators.” The wind industry alone has “doubled employment in two years,” and now has 110,000 workers, she said.
But wind’s production tax credit of about 2.1 cents per kilowatt-hour expires at the end of this year, and that means manufacturing is winding down as suppliers fulfill orders but have few in the pipeline. From June to the end of 2012, Bode said, the industry is facing 37,000 layoffs, mostly in manufacturing.
Solar’s investment tax credit is good till 2016, but a provision allowing developers to cash out that credit up front, called Section 1603, expired at the end of 2011.
Rhone Resch, CEO of the Solar Energy Industries Association, said the tax equity market, where developers used to sell the investment credits, has not recovered from the recession, constricting investment. Over three years, the 1603 provision benefitted 22,000 solar projects across the country, he said, mainly small-scale local projects, with an average size of just $150,000.
“We’re all in the same boat, and we sink or swim together.”
The hydro and geothermal industries lose their production tax credit at the end of 2013, a credit that financial experts told the conference has been critical to structuring financing packages for hydro projects.
A Political Football
The tax provisions face a daunting future because of broader Congressional wrangling over budget and tax code reform, speakers said.
Kristina Johnson, CEO of Enduring Energy LLC, said tax benefit opponents talk about “leveling the playing field” for energy alternatives to compete in the market. Johnson cited a recent study calculating the health care effects from coal-burning, noting, “We’re underwriting the costs of coal by $300 billion a year.”
“Level the playing field?” she asked. “Bring it on!”
A big issue for these technologies is that tax benefits are only extended for a year or two, speakers said.
“The tax incentives for the extractive industries are permanent in the tax code,” said Lauren Bazel, Special Assistant to Sen. John Kerry (D-MA), and so aren’t debated the way renewable tax incentives are. All energy subsidies should be looked at together, she said.
Resch said he has legislators asking why he is back in their offices so often. “I say just make the tax credits permanent, and we won’t be in your office. We’ll just be at your fund-raisers” like traditional energy advocates.
But, he added, “There are a lot of traditional industries that don’t want to see the game changed.”
The NHA has just released a map showing how employment in hydro’s supply chain extends into states and Congressional districts, and Bode, Resch and Ciocci said they’d look into overlaying the supply chains for the three industries on a map to illustrate to legislators how important their industries are to local employment.
Bode and Resch said the House Ways and Means Committee will be looking at the tax extensions the week of April 23, and urged the NHA conference attendees to contact their legislators and get all company employees to do so as well.
To read more about tax credits and the renewable energy industry on Breaking Energy, click here.
Bode said she sees bipartisan support but nothing is getting done, and Bazel predicted nothing will get done until a lame duck session after the November election.
But layoffs are starting in June, said Bode, adding, “Lame duck won’t do.”
This is the second article in a two-part series reported from the National Hydropower Association conference April 18 in Washington DC. Click here to read the first story.