In the midst of the Copenhagen negotiations last week, the White House announced a proposal to give a huge increase in tax breaks to manufacturers who produce wind, solar, geothermal, or other clean energy technologies. The goal of the tax breaks is to stimulate more job growth and promote clean energy technology more in the US.
With clean energy technology poised to become the third largest sales sector in the world, Obama and Biden realize that they must stimulate this field in the US a bit more to get the jobs that go with that growth.
In the proposal set forth by the White House on Thursday, new or expanded factories making clean energy technology (i.e. electric vehicles, solar panels, high-speed trains, and wind turbines) can get a 30% tax credit. This raises the current cap on these tax credits from $2.3 billion to $7.3 billion.
In addition to the tax credit, Obama’s proposed ‘jobs plan’ includes “increased investment in public works, small business tax cuts and incentives for homeowners who retrofit their houses to be more energy efficient.”
Congress will need to approve this jobs plan for it to go through.
Vice President Joe Biden, in announcing this tax credit increase proposal, said, “While the public and private sectors are creating a demand for new industries such as wind, solar, high-speed rail and medical IT, we need to do more to ensure that we make these products in America.” Furthermore, he said, “I don’t understand why we can’t once again produce cutting edge technology that will create 21st century jobs that are here in America, not abroad.”
In the initial round of tax credits with a cap of $2.3 billion (part of last year’s $787 billion stimulus plan), 1000 applications were received and 600 credits were granted (specific projects to be announced in the coming year). In the remaining 400 cases, it is presumed there were many worthy proposals that just could not be funded due to the $2.3 billion cap. So, hopefully, a $5 billion increase will solve that issue.
Obama suggested the $5 billion come from a $200 billion surplus in the financial industry bailout fund, a modest amount of that huge chunk of money.
Considering the great success of the first program, the expected boom in the clean energy technology market, and the great need to get our greenhouse gas emissions in check as soon as possible, I think this increase in tax credits should be a given! We will see what Congress decides in the near future.