by Richard W. Caperton
Here we go again.
After spending the last year investigating the scandal-free DOE Loan Guarantee Program, House Republicans have thrown in the towel. Instead of getting down to serious business, though (like, extending the Production Tax Credit), they’ve decided to waste more time and taxpayer money investigating another clean energy incentive: the Section 1603 tax credit reimbursement program.
Here’s what Speaker of the House John Boehner (R-OH) had to say on this topic yesterday:
“You know, I made clear earlier this year that oversight of the Obama administration’s policies on jobs, on the economy, and its spending taxpayer dollars was going to be a priority. Two weeks ago, Chairman Upton at the Energy & Commerce Committee began looking into the Department of Energy’s Section 1603 grant program, a Solyndra-style ‘stimulus’ program that offers cash payments to renewable energy companies. More than $10 billion – that’s with a ‘b’ — $10 billion has been spent on this, and Secretary Chu said it created ‘tens of thousands of jobs,’ except there’s no evidence to support that.
“The Energy & Commerce Committee set a deadline for today for the Energy Department & Treasury Department to produce documents or information about what taxpayers got for their $10 billion. The administration thus far has failed to provide the committee with any information to justify this claim.
“Listen, the American people continue to ask the question ‘Where are the jobs?’ They deserve answers and they deserve the truth.”
Fair enough. Americans deserve to know the truth, and here it is: the 1603 program led to thousands of clean energy jobs, leveraged billions of dollars in private investment, and helped clean energy industries grow despite tough economic times.
You know how you can tell that Boehner is not interested in the truth? The entire premise of this investigation is based on a misleading statement, that the 1603 program is a “Solyndra-style” program.
Let’s be clear: the 1603 program and the Loan Guarantee Program are fundamentally different. The Loan Guarantee Program was designed to address shortcomings in financial markets, which prevented clean energy companies from getting loans. To fix this, companies could apply for a loan guarantee from DOE, and the agency gave guarantees to a small number of applicants. As Herb Allison found in an independent review of the loan guarantee program, DOE managed the program effectively and has accurately accounted for the program’s risk.
The 1603 program, on the other hand, was designed to address the lack of tax equity financing after the economic crisis. After the collapse of the financial markets, clean energy companies found it impossible to use tax credits. Typically, these companies sell tax credits to so-called “tax equity investors” – i.e. companies with enough taxable profits to take advantage of the credits. But these tax equity investors disappeared during the financial crisis, so the government stepped in and directly reimbursed clean energy companies for their tax credit. As I wrote two years ago, this is a more efficient and cost-effective system, for both the company and the government.
Now, we have three years of experience with the program and we know that the results back up the initial expectations. Because of the 1603 program, investments in wind and solar soared from 2009 to 2011, and the domestic clean energy manufacturing sector also grew.
Speaker Boehner seems to think that this program hasn’t created any jobs. This simply doesn’t make any sense. More than 5,000 projects were built with Section 1603 reimbursements. Obviously, wind farms and solar arrays don’t appear out of thin air: people build them. And, people build the parts that go into them. And, people build the factories where those parts are made. All of these jobs are real jobs, and they all matter. As an example of how these jobs add up, a study by EuPD Research found that extending the Section 1603 program for one year would create 37,000 jobs in the solar sector alone.
This program has also brought many billions of dollars off of the sidelines and into clean energy investments. Each $1 in reimbursements must be matched by more than $2 in private capital. This means that the Section 1603 program leveraged more than $20 billion.
Despite Speaker Boehner’s bluster, it’s clear that the Section 1603 program has been a responsible, cost-effective success. Boehner doesn’t even have any new information that would suggest otherwise, so it’s clear that this is just another fishing expedition led by the House Republicans. We saw what happened with the Solyndra investigation. Why are we wasting more time and money with this made up problem? Especially when the program was an unqualified success!
If Speaker Boehner wants to tackle a real scandal, let me suggest one: I can look at every 1603 reimbursement recipient, and learn that Udder View Farms in Washington got $4,970 on July 11, 2011, to help them build a solar thermal system. I can find this information for all $11,012,886,778 that’s been distributed through this program.
But, the government gives $4 billion worth of tax breaks to oil companies every year, and we have absolutely zero idea what we get for that money! We don’t know which companies benefit. We don’t know what they do with the money. And, we certainly don’t know if the tax breaks create a single job. If they’re looking for something to investigate, Congress should look into what taxpayers get back for every single one of those $4 billion.
Richard W. Caperton is Director of Clean Energy Investments at the Center for American Progress.