Conservatives want to end support for America's fastest growing industry
In these grim economic times, one U.S. industry has defied gravity. Not only is it growing, it’s the fastest growing industry in the country. It now employs 100,000 Americans at 5,000 mostly small businesses spread across all 50 states. Unlike in so many others, in this industry the U.S. has a positive trade balance with China; it is a net exporter of high-tech manufactured products.
In addition to being successful, this industry is wildly popular with the American public, across regions, demographics, and political parties. It has been embraced by mainstream institutions from Walmart to the U.S. military. And unlike its competitors, this industry creates positive externalities, social benefits not reflected in its profits.
The startling counter-cyclical growth of this industry had been unleashed by a modest bit of economic stimulus: a cash grant program that helps project developers compensate for the crippling credit crunch. In contrast to the familiar tax credits — which tend to go to large, mature companies that have enough profit to benefit from them — cash grants help small, innovative, growing businesses that are plowing revenue into growth. In fact, a recent study found that they work twice as well as tax credits. In 2009, this cash grant program pulled in $4.50 of private capital for every public dollar it invested.
The cash grant program expires at the end of the year. Extending it for a single year could support 37,000 additional jobs over and above the industry’s baseline. And here’s the capper: Since the cash grant program is simply repurposing money that’s already devoted to a tax credit program, it requires no new federal revenue.
So you’d think this would be a home run, right? At a time when jobs are at the top of every politician’s mind, surely a bit of low-cost economic stimulus that doesn’t increase the deficit and leverages tons of private capital and creates tens of thousands of jobs can serve as the rare locus of bipartisan cooperation. Right?
Except the industry in question is the solar industry. And because this industry involves clean energy rather than, I dunno, tractor parts, it has been sucked into conservatives’ endless culture war. Rather than lining up to support the recession’s rare economic success story, Republicans are trying to use the failure of a single company — Solyndra — as a wedge to crush support for the whole industry. Odds are they’re going to succeed and the cash grant program (Sec. 1603) won’t be renewed next year.
Keep in mind, this isn’t about the much-debated loan guarantee program (Sec. 1705). This is about cash grants to developers that have committed to building projects: According to the industry, Sec. 1603 has enabled the development of 19,000 solar projects in 47 states and the deployment of $4.4 billion in investment.
By any reasonable measure, Sec. 1603 an extremely successful program, both in the economic stimulus it’s provided and the growth it’s stimulated in renewable energy industries, particularly solar. At about this same time last year, renewables industries went into crisis mode and barely, at the last minute, got a one-year extension of 1603 out of the Obama-Boehner tax deal. Now it’s crisis mode all over again as 1603 once again threatens to sunset.
This. Is. Insane. Right in front of our noses is what everyone says they want: a growing industry, creating jobs, leveraging economic stimulus into enormous private-sector investment. And Republicans are going to let it die! And Democrats are going to let them!
Needless to say, sending a fledgling industry into annual lobbying panics is not the optimal way to support them. As conservatives claim to understand, investors need to have some confidence that the long-term situation is stable. Imagine the growth this industry would see if they had that confidence!
It’s just incredibly frustrating. Renewable energy industries are mounting a savvy marketing and lobbying campaign, but they don’t have anything approaching the money their competitors in fossil fuels do. Where are the politicians speaking out in support? Where is the professional left? Where are the pundits?
Some references for the above:
- EuPD Research report on job-growth potential of extending Sec. 1603
- InsideClimate story on solar industry’s fight for Sec. 1603
- Treasury Dept. info on Sec. 1603
- Bipartisan Policy Center report on cash grants vs. tax credits
- The Solar Foundation’s National Solar Jobs Census 2011
- U.S. Solar Energy Trade Assessment 2011 [PDF], showing positive trade balance with China
- Tons of great info at Solar Works for America