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Grant Program Criticized by GOP Helped Create 75K Jobs a Year -- Obama admin

April 9, 2012

The Treasury Department's $9 billion renewable energy grant program supported as many as 75,000 jobs each year it was available, according to a new report from the Department of Energy that counters Republican criticism of the grant-in-lieu-of-tax-credit effort.

Known as the 1603 program, the popular effort allowed renewable energy developers to claim a one-time cash payment instead of the usual tax credit. It expired last year, prompting the Obama administration to urge its renewal.

But Republicans have used the program in their narrative of an administration that has failed in its clean energy investments, linking it to the DOE loan guarantee program that gambled $535 million on the failed Solyndra solar energy company. Last month, the House Energy and Commerce Committee asked DOE and Treasury for information about the precise number of jobs the 1603 program has created.

The new report -- produced by DOE's National Renewable Energy Laboratory -- concludes that the 1603 grants helped create between 52,000 and 75,000 jobs per year from 2009 through 2011. Most of those were indirect jobs through supply-chain industries like manufacturing; the report attributes 9,400 to the direct design, development of construction of grant-funded projects. The report also found that the grant program supported between $26 billion and $44 billion in economic output over the course of its three-year lifespan.

In a letter to Energy and Commerce Chairman Fred Upton (R-Mich.) last week, DOE Assistant Secretary David Danielson asserted that the report's findings support prior analyses that show the program has created jobs and spurred investment. The United States jeopardizes its international lead in clean energy investments when the expiration of programs like 1603 create uncertainty in the industry, Danielson wrote.

 "The United States has reached a crossroads," Danielson wrote, "we can play to win in the clean energy race -- investing in America's workers, industries, and innovations -- or we can cede leadership to other countries that are investing in those industries."

But Upton and Rep. Cliff Stearns (R-Fla.) -- whose oversight subcommittee has led inquires into Solyndra -- are not convinced. In a joint press release, they highlighted a disclaimer in the DOE report that concedes that some jobs may have been created without the 1603 program.

"Some projects supported by a 1603 award may have progressed without the award, while others may have progressed only as a direct result of the program," the report reads. "[T]herefore, the jobs and economic impact estimates can only be attributed to the total investment in the projects."

Upton and Stearns contend that is not specific enough. "It's essential to understand what happened to the billions of dollars pushed out the door as part of the stimulus program as we work toward a stronger economic recovery, and particularly as the president urges more spending on his favored programs," they said. "The slow and skimpy response from two key agencies about the direct effectiveness of this program are disappointing, and make clear that much more information is needed about 1603 grants."

House Republican leaders have latched onto the 1603 program as the controversy over Solyndra winds down. Last month, Speaker John Boehner (R-Ohio) characterized the program as a "Solyndra-style stimulus program" that has so far not showed the job creation results asserted by its supporters.

But the two programs have some key differences. Rather than guaranteeing loans to clean energy projects, the 1603 simply allows renewable energy projects to take a 30 percent grant instead of the existing investment tax credit or a production tax credit. The program, which is only eligible for projects that have been built, merely changes the timing of when the energy incentive can be claimed (E&ENews PM, March 29).

A preliminary report earlier this year from the nonpartisan think tank Resources for the Future concluded that the 1603 grant program was successful where the loan guarantee program was not, partly because the grants targeted "marginal investment in renewable power that would not occur if project developers had to seek out a tax equity partner."

In contrast, DOE's 1705 loan guarantee program -- which invested in Solyndra -- did not have a "meaningful impact on the U.S. power sector," according to the report. Among the reasons: a slow roll-out process and focus on conventional renewable power.

"While the 1603 grant and underlying tax credits were necessary for renewable generation investment, the loan guarantees were not sufficient and do not appear to be necessary for the vast majority of renewable generation projects," the report concluded.

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Content Last Updated: 09/21/2011