Today, U.S. Senator Maria Cantwell (D-WA) sent a bipartisan letter to Senate leaders, cosigned by 24 of her Senate colleagues, urging that any lame-duck tax package considered by the Senate include a two-year extension of the Treasury Grant Program (TGP) which has proven very effective in creating new jobs and getting clean energy projects built. The lawmakers highlighted how the TGP, also known as the "Section 1603 program," was the reason the renewable energy industry was able to invest tens of billions of dollars in new projects and create tens of thousands of jobs over the last two years despite the severe economic downturn. However, given equity markets have yet to recover, failure to extend the TGP program will halve the amount of financing available next year for renewable energy projects, leading to substantial job loss. The letter also makes the case for allowing public power entities, which provide electricity for over a quarter of Americans, to also utilize the program.
"With most utilities and developers still unable to utilize existing production and investment tax credits, and our nation's economic recovery dependent on the creation of new jobs, we believe a two-year extension of the TGP is critical," wrote the Senators. "Absent an extension of the TGP, the anticipated total financing available for renewables is expected to decrease by 56 percent in 2011. This would jeopardize investments in additional electricity generating capacity and the increased energy security, associated jobs, and avoided environmental impacts they provide. However, a recent study found that a two year extension of the TGP would result in nearly 65,000 more jobs in the solar industry alone, and enough additional solar to power more than 1.2 million homes."
Created as a part of the American Recovery and Reinvestment Act, the TGP provides cash grants in lieu of tax credits for renewable energy projects. The economic meltdown has prevented utilities from using existing production and investment tax credits for clean-energy development. Extending the TGP will promote and maintain strong growth in the clean energy sector.
The letter was sent to Senate Majority Leader Reid, Minority Leader McConnell, Finance Committee Chairman Baucus, and Finance Committee Ranking Member Grassley. The letter was also signed by Senators Dianne Feinstein (D-CA), George LeMieux (R-FL), Ben Nelson (D-NE), Kent Conrad (D-ND), John Kerry (D-MA), Debbie Stabenow (D-MI), Ron Wyden (D-OR), Robert Menendez (D-NJ), Bill Nelson (D-FL), Jeff Merkley (D-OR), Tom Udall (D-NM), Michael Bennet (D-CO), Kirsten Gillibrand (D-NY), Jeanne Shaheen (D-NH), Barbara Boxer (D-CA), Al Franken (D-MN), Bernie Sanders (D-VT), Sheldon Whitehouse (D-RI), Bryon Dorgan (D-ND), Tim Johnson (D-SD), Ben Cardin (D-MD), Patty Murray (D-WA), Mark Udall (D-CO), Jack Reed (D-RI), and Amy Klobuchar (D-MN).
More information on Cantwell's work on the TGP is available here. Cantwell is a member of the Senate Finance Committee and also chairs the Senate Energy and Natural Resources Subcommittee on Energy.
Text of the letter follows below.
November 29, 2010
Dear Senate Leaders:
We write to urge inclusion of a two-year extension of the successful Treasury Grant Program (TGP) in any tax package the Senate considers during the current lame-duck session. The TGP has been widely credited with maintaining strong growth in the renewable energy sector in 2009 and 2010, despite the severe economic downturn. Also known as the "Section 1603 program," the TGP has proven a particularly effective job creation tool. According to a Lawrence Berkeley National Laboratory study, the program has enabled hundreds of renewable energy projects to move forward and saved over 55,000 American jobs in the wind industry alone.
Prior to the economic meltdown, clean energy project developers relied on "tax equity partnerships" with investors to take advantage of clean energy tax incentives. In 2008, the economic meltdown froze the $8 billion tax equity market, jeopardizing billions of dollars in clean energy investment. The TGP proved an effective replacement for these partnerships, supporting around $18.2 billion in clean energy investment to build 8,600 megawatts of renewable energy generation through October 25, 2010.
With most utilities and developers still unable to utilize existing production and investment tax credits, and our nation's economic recovery dependent on the creation of new jobs, we believe a two-year extension of the TGP is critical. According to a survey of all the leading participants in the tax equity market, absent an extension of the TGP, the anticipated total financing available for renewables is expected to decrease by 56 percent in 2011. This would jeopardize investments in additional electricity generating capacity and the increased energy security, associated jobs, and avoided environmental impacts they provide. However, a recent study found that a two year extension of the TGP would result in nearly 65,000 more jobs in the solar industry alone, and enough additional solar to power more than 1.2 million homes.
It is important to emphasize that the TGP did not create an entirely new federal incentive program; rather it simply allowed clean energy projects to utilize various existing investment and production tax incentives, which are already available through 2012, 2013, or 2016 and included in the revenue baseline. However, given the structure of the TGP, extension also offers a unique opportunity to provide parity for public power producers, rural electric co-ops, and municipal utilities -- non-income-tax-paying entities that provide electricity for over a quarter of Americans. The current allocation of Clean Renewable Energy Bonds (CREBs) has been oversubscribed and additional support for consumer-owned utility projects is essential.
Due to these significant benefits, many of our Senate colleagues have been calling for the program's extension and expansion for many months. In April, nineteen Senators wrote to you to request that you include a TGP extension, modeled on the Renewable Energy Incentive Act (S.2899), in the next major piece of legislation developed within the Senate Finance Committee.
Given its proven track record, and the importance of diversifying our nation's energy sources, we reiterate the call made by our colleagues in April to extend this program. We believe that any tax package should be designed to stimulate economic growth and job creation, and should include an extension of the Treasury Grant Program with an appropriate offset.
Senators Cantwell, Feinstein, LeMieux, Ben Nelson, Conrad, Kerry, Stabenow, Wyden, Menendez, Bill Nelson, Merkley, Tom Udall, Bennet, Gillibrand, Shaheen, Boxer, Franken, Sanders, Whitehouse, Dorgan, Johnson, Cardin, Murray, Mark Udall, Reed, and Klobuchar.