Making Advanced Clean Energy Manufacturing a Priority

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Many are aware of the subsidies, tax credits, and grants available to property owners and utilities to install and utilize alternative energy (i.e., wind, solar, biomass, etc.). Unfortunately, many forget that these technologies need to be manufactured somewhere. The majority of the panels that go into a photovoltaic array and the large blades that make up wind turbines are currently being manufactured overseas, often in China. This directly contradicts President Obama’s plan to spur green job growth with the passage of the Stimulus Bill. Enter the Security in Energy and Manufacturing Act (SEAM Act).

Under the proposed SEAM Act, the Advanced Energy Manufacturing Tax Credit (MTC), an existing tax credit, which provided a 30% of total project cost credit to help fund projects that expanded, or re-equipped clean energy manufacturing plants would be extended. The SEAM Act goes beyond a simple extension of the $2.3 billion program, it redefines it. Infusing an additional $5 billion into the program while substituting grants for tax credits, it will allow smaller startups who haven’t garnered the tax liability to apply for tax credits to offset some of the costs of their planned plants. It also prioritizes purely manufacturing projects over assembly plants.

This Act comes at a key time, as there are hundreds of projects that applied for credits under MTC that were denied because funding ran out so quickly. Like the “Cash for Clunkers” program, the actual interest in MTC far outweighed initial projections, proving that it was a successful program.

But why, you might ask, should we focus on clean technology manufacturing. According to the Act’s author, Representative Phil Hare from the 17th congressional district in Illinois,

“As clean energy becomes one of the world’s largest industries, forecasted at over $2 trillion annually, advanced energy manufacturing will offer one of the best chances for the U.S. to restore its manufacturing base and create good-paying jobs domestically.”

This is one of many reasons why the US needs to spur clean manufacturing jobs. Over the past several decades this nation has seen its manufacturing base erode. Losing out to cheaper Chinese products, the manufacturing industry, one of the largest employment sectors in the US has seen the largest decline in jobs over the past ten years. According to the United States Department of Labor, in 1998, the manufacturing sector employed the second highest number of workers, over 17.5 million. Since then, the industry has seen a 2.6 percent annual decrease in jobs, which is double the rate of decline of the next-to-worst sector. Advanced energy manufacturing offers a unique opportunity to pursue an environmentally responsible agenda while creating many permanent, high-paying jobs that are desperately necessary to revive an employment powerhouse in serious decline. With the promise of huge green job creation numbers to live up to, why not focus on the area of biggest potential.

The demand side makes an even stronger case to up clean technology manufacturing. With the new requirement that 25% of each state’s energy portfolio must come from clean, renewable energy being considered in Washington and the potential for a cap and trade system, the demand for large solar and wind farms will take off. Couple that with the improvements that are being made to the efficiencies of these technologies pushing them towards being on par with coal in terms of the production price per kW, and you start to have not only an environmental reason and a government mandated reason, but also an economic reason. Maybe the one positive that came of out of the recent oil spill in the Gulf, is that it quieted some “Drill baby Drill” proponents. Clearly an increase in off-shore drilling is not the answer to our energy situation; why not look to an abundant and everlasting source, the sun, which creates not only solar power, but wind power as well.

At present, renewable energy production is already taking off. According to the U.S. Energy Information Administration, over the past ten years, wind energy production has increased an average of 24% annually. Over that same time period, energy production from crude oil has decreased an average of 2.4% annually. While crude oil reserves are running out, the potential for wind and solar production is only increasing. Let’s start focusing our efforts and our money on a sector that has some potential. For those of you who wonder where all this money could come from, look no further than the oil industry. The oil industry has received significant subsidies from the government so they can continue searching for an archaic fuel source that is destroying our environment. Greenpeace estimates the oil industry receives between $15 billion and $35 billion a year from taxpayers in the form of avoided taxes.

photo: OregonDOT

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