Congressional Democrats mobilize to save Treasury grant program

Source: John McArdle • E&E • Posted: Friday, December 2, 2011


With just a month to go before it is set to expire, congressional supporters of a Treasury Department renewable energy grant program have started lobbying their colleagues to keep the effort alive for one more year.
Last year, an extension of the Treasury Department’s Section 1603 grant-in-lieu-of-tax-credit program was tucked into a mid-December tax deal after House and Senate leaders rallied around the effort. But this year, the program is facing a very different environment, energy insiders say, where government subsidy programs for renewable energy efforts have been tainted by the August collapse of the Solyndra solar energy company that received a half-billion dollars in loan guarantees through a Department of Energy program.Some observers privately wonder if the Treasury program could become collateral damage as members of Congress and the White House worry about bringing up the specter of Solyndra.At least one Republican proposal has already been floated to repeal a slew of subsidies including the 1603 program, which was originally created through the stimulus bill.

This week a quartet of House Democrats including Reps. Earl Blumenauer (Ore.), Rush Holt (N.J.), Paul Tonko (N.Y.) and Mike Thompson (Calif.) began circulating a letter calling for their colleagues to join them in supporting an extension of 1603, which allows renewable energy projects to take a 30 percent grant instead of the existing investment tax credit or a production tax credit.

“Since enactment, this program has leveraged more than $22.8 billion in private sector investment for 22,000 projects across the clean energy industry, including solar, wind, biomass, fuel cells, combined heat-and-power, and hydro, in all 50 states,” the congressmen wrote. “Extension of this successful and effective program will create jobs, spur economic growth, and promote private sector development of clean energy technologies.”

The congressmen point out that under the 1603 program, developers receive a federal grant in lieu of a tax credit, which changes the timing of when the energy incentive can be claimed.

“This change in timing … provides the liquidity and funding needed to develop domestic energy projects. As a result, the program underpinned strong growth in the renewable energy sector during the current economic downturn,” they wrote.

The Solar Energy Industries Association (SEIA) recently released estimates that 37,000 additional solar energy jobs could be created by extending the 1603 program by a year. The report found that a longer, five-year extension would provide more predictability and stability and would support as many as 114,000 jobs, including more than 55,000 direct and indirect solar workers.

Yesterday, SEIA and a coalition of about 750 companies, small businesses and organizations sent a letter to Capitol Hill asking Congress to act to save the program.

“There are clearly several time-sensitive issues that Congress plans to address before adjourning for the year,” said Manning Feraci, vice president for legislative affairs at SEIA. “In that regard, extension of the 1603 program is vital if we are to avoid the job losses and reduced investment in energy projects that would accompany expiration of the program.”

But the backlash against the 1603 has also intensified.

This week, the conservative Heritage Foundation panned any sort of extension to the program.

“These taxpayer-funded subsidies are helping foot the bill for projects that either should not have happened or, if they were good investments, wouldn’t need the government’s help,” Nick Loris, a policy analyst for Heritage, wrote this week. “Taxpayer-funded cash grants simply shift labor and capital away from one sector of the economy and towards the renewable sector that’s politically preferred.”

The effort by members to rally support for the 1603 program is getting a bit of a later start this year than it did last year, but supporters say that’s just because the deficit reduction congressional supercommittee sucked up all the attention in the weeks leading up to Thanksgiving.

Thompson said the push is on to find some sort of legislation that will move in the next 30 days onto which a 1603 extension could be included.

He added that he’s not being picky about what form that will take.

“Whatever is leaving the station,” he said.

Along with a measure to keep the government funded through mid-December Congress is expected to take up legislation for extending the payroll tax holiday, unemployment benefits and a slew of other items.

“I think there’s going to be several vehicles moving in the next couple weeks,” Blumenauer said. “I think that there is a growing recognition that it’s bipartisan, that we can’t afford for these provisions to go by the wayside.”

But with Republicans in control of the House, observers suggest that the Senate will have to act first if the 1603 program is going to get another yearlong extension.

Blumenauer said today that efforts are under way to stir action in the Senate. And one Senate Democratic staffer with knowledge of the conversations about 1603 in that chamber said yesterday that Democratic senators are fighting for an extension.

But “it’s an uphill battle,” the Senate staffer said.

One of the things standing in the way of that effort is the taint of Solyndra.

“Solyndra was going to be something that those who are opposed to renewable energy, those who are opposed to clean energy and those who are opposed to helping this president achieve any success will be using as a red herring,” Thompson acknowledged yesterday. “I don’t think they are going to miss any opportunity to bring Solyndra up.”

Reporter Emily Yehle contributed.