US government awards $2.3bn for clean energy manufacturing

New York, 7 January: US federal agencies have awarded $2.3 billion in tax credits for clean energy manufacturing projects in a move designed to spur a major push in renewable energy development.

Using funds set aside from the economic stimulus package passed in 2009, 183 projects have been approved to receive tax credits by the Department of Treasury and the Department of Energy (DOE). The government investment will be matched by as much as $5.4 billion in private sector funding.

The Advanced Energy Manufacturing Tax Credit, passed by Congress last February as part of its economic stimulus package, authorises the Treasury to provide developers with an investment tax credit of 30% for facilities that make particular types of equipment such as wind turbines, solar panels, and equipment to capture and sequester carbon dioxide.

The programme is capped at $2.3 billion and was more than three times oversubscribed. The projects receiving tax credits were chosen based on criteria such as domestic job creation and the greatest net impact in avoiding or reducing pollutants.

P rojects selected for this tax credit must come into service by 2014 and 30% of them will be completed in 2010.

“These tax credits will be critical in sustaining manufacturing activity in the current economic downturn,” said Denise Bode, CEO of the American Wind Energy Association. But “the industry is still vulnerable to the impacts of on-again, off-again tax credit policies,” she added. 

The tax credit is on the short list of stimulus programmes that are likely to be extended via a jobs bill to be considered by the Senate in the next few weeks, said Curt Rich, head of the public policy group of law firm Van Ness Feldman. 

The tax credits are considered an important component in meeting President Barack Obama’s goal of doubling the amount of renewable energy used in the US in three years.

Renewable energy advocates praised the tax credits, but urged Congress to pass federal climate legislation and adopt a renewable portfolio standard to create a market with more certainty and spur sufficient production to meet or exceed Obama’s goal.

“The best way to create millions of jobs and heal our ailing economy is to pass comprehensive clean energy and global warming legislation, said Sean Garren, clean energy advocate for NGO Environment America in Washington.

Approved projects include a smart grid project by South Carolina-based Itron to expand production of smart meters for the residential market that will receive about $5.2 million in tax credits and a new wind turbine blade manufacturing facility by TPI Composites in Nebraska that will get $5.1 million in credits.