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U.S. Invests $150 Million In Clean Energy Manufacturing Tax Credits — Could It Be The Last Time?

By Emily Atkin on December 12, 2013 at 11:57 am

"U.S. Invests $150 Million In Clean Energy Manufacturing Tax Credits — Could It Be The Last Time?"

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A worker assembles mechanic parts of a wind turbine at a factory in China.

A worker assembles mechanic parts of a wind turbine at a factory in China.

CREDIT: AP Photo/Alexander F. Yuan

Twelve clean energy businesses in the U.S. will receive a total of $150 million in tax credits for domestic manufacturing equipment under a federal program that is set to expire in 2014, the Obama administration announced Thursday.

The awards will help businesses build up their manufacturing equipment and infrastructure for products that support wind energy, hydropower, smart grid technologies, and fuel efficient vehicles, according to the announcement from the U.S. Department of Energy. Among the awards, Corning Inc. will receive $30 million to expand the manufacturing capacity of its diesel emissions control products facility; Cree Inc. will get $30 million for increased capacity to produce energy-conserving lighting; and Ford Motor Company and General Motors Company will receive a combined $50 million to support their respective manufacturing facilities that produce electric cars.

Wind company LM Window Power Blades will also be able to hire 170 people due to the $700,000 tax credit it will receive, the DOE said, for increased company participation in the North American large-blade market.

What made these awards possible is a federal tax program called the Advanced Energy Manufacturing Tax Credit, or 48C Program, which is set to expire in early 2014. The program was implemented through President Obama’s economic stimulus package, the American Recovery and Reinvestment Act of 2009 (ARRA), which provided about $90 billion in federal investment and stimulated another $100 billion in private investment in energy efficiency, renewable energy, and low-carbon fuels and vehicles. Combined with existing initiatives at the local and state level, the clean energy incentives under the ARRA helped renewable energy capacity in the United States double between 2009 and 2012, according to a report released Tuesday by the Center for American Progress.

Though the report called the 48C Program “one of the ARRA’s most successful programs” and noted that one more investment is scheduled to come out of it before its expiration, it also said there would be “little prospect” for new federal congressional programs to provide incentives for clean energy manufacturing in the future.

“President Obama remains committed to using regulation and his executive powers to drive the energy transformation as part of a larger national response to climate change … but there are distinct limits on what any president can do without congressional action,” the report said. “Indeed, the current Congress seems especially hostile to any transformation of our energy system toward lower-carbon alternatives.”

Thursday’s investment announcements, however, are a step toward building up America’s advanced manufacturing industry which, according to CAP’s report, has been falling behind compared to countries like Germany and particularly, China, which the report said was the current leader for developing sustainable manufacturing.

Goldman Sachs has reported that China plans to invest $1.7 trillion in renewable manufacturing over the next five years — the equivalent of 20 percent of the country’s Gross Domestic Product in 2011. And despite its tragic status as the world’s largest carbon emitter and its incredible smog problem — credited to the fact that the country focuses more on building its export base than pushing for domestic energy transformation or pollution control — China has the largest renewable energy capacity in the world, totaling 152 gigawatts in 2012, or 25 percent of the global total, CAP’s report said.

“Throughout our history, our most effective economic development initiatives have focused not only on creation of new technologies, but also on providing the infrastructure for those technologies to be developed, produced, and moved across the United States,” according to the report. “Extreme weather events such as Superstorm Sandy not only underscore the need to do something about our warming planet, but they also highlight the inherent vulnerability of our existing energy infrastructure — and the imperative to strengthen and modernize it.”

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