New 30% tax credit for advanced energy manufacturing industries
The Department of Energy on Thursday released the details of a new $2.3 billion manufacturing tax credit, enacted earlier this year as part of the Recovery and Reinvestment Act. The tax credit of 30% is for investment in new renewable energy manufacturing facilities and re-equipped or expanded facilities.
The idea behind the stimulus is to grow the domestic manufacturing industry for clean energy, stimulating economic growth, creating jobs, reducing greenhouse gas emissions and building a long-term strategy for addressing them.
“These tax credits will help create thousands of high quality manufacturing jobs in some of the highest growth segments of the economy,” said Energy Secretary Stephen Chu. “This is an opportunity to develop our global leadership in clean energy manufacturing and build a secure, sustained base of jobs for America’s workers,” added Chu.
Up to $2.3 billion in MTCs will be allocated for advanced energy projects, which will support total capital investments of almost $7.7 billion in new renewable and advanced energy manufacturing projects using solar, wind, geothermal and other renewable sources. Other sectors eligible include the manufacturing of energy storage and management technologies, electric vehicles and components, biofuel refineries and carbon capture and sequestration technologies.
New programs expected to create new jobs in clean energy sector
The announcement comes as part of a string of cash infusions from the Obama administration, including the recent announcement of $2.4 billion for advanced battery development. But the monies awarded thus far are still less than a quarter of the $40 billion in Recovery Act Funding for clean energy, many of which are weighted to heavily reward job creation in the clean energy sector.
The Advanced Energy Manufacturing Tax Credit does not support energy generation projects, but rather the manufacturing facilities that support generation and conservation. There is a separate program run jointly by the departments of Energy and the Treasury that essentially prepays the tax benefit companies would receive in 2010 for the production tax credit.
Applicants for the MTC will receive tax credits based on the expected commercial viability of their project and the ranking of their project relative to other projects. Rankings are based on expected job creation, reduction of air pollutants and greenhouse gas emissions, technological innovation, and ability to have the project up and running quickly.
“Once you start seeing more investments made in our economy recovering, as we stabilize and we get people back to work, then I think there’ll be more interest in expanding,” Secretary of Labor Hilda Solis recently told The Associated Press.
Industry representatives also welcomed the announcement as a boon for job growth.
“This program will attract billions of dollars of investment in manufacturing facilities in the U.S. and will create new jobs in states where they are needed most,” said Rhone Resch, CEO of the Solar Energy Industries Association. “We expect solar-related provisions in the stimulus bill like this one to create 110,000 jobs in the solar industry in 2009 and 2010 combined.”
The application period for the MTC opens August 14, 2009 and closes on September 16, 2009. Further information about the tax credits and how to apply for them can be found at the Department of Energy website.
Image courtesy of Vestas Wind Systems A/S
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