$11 Billion in Green Grants Produces Few Jobs, House Report Says

Fred Lucas | June 20, 2012 | 4:29am EDT
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U.S. Department of Energy, Washington, D.C. (CNSNews.com/Penny Starr)

(CNSNews.com) – An Obama administration green jobs grant program that spent $11 billion lacks a verifiable job-counting system and likely created only a fraction of the jobs it claims, according to a staff report by the House Energy and Commerce Committee.

While Energy Secretary Steven Chu said the grants “created tens of thousands of jobs,” the government’s own National Renewal Energy Laboratory estimates it created 910 direct jobs.

The House report criticized even those numbers, saying: “The job creation numbers that exist for Section 1603 are based on models, not actual data from completed projects. Neither Treasury nor DOE have turned over actual jobs data on the Section 1603 grants program to the committee.”

The program was created through the 2009 American Recovery and Reinvestment Act, better known as the stimulus. Of the $22.6 billion allocated, just under half has been spent. The rest is set to be spent by the end of fiscal year 2017.

The grants have gone to 34,140 projects, with $8.2 billion going for wind projects and another $2 billion going to solar projects. The remaining amount went to geothermal electricity, biomass, solar, thermal and small wind projects.

Despite being part of the stimulus act, “job creation is not one of the statutory requirements for eligibility and thus it is not a factor in the consideration process. Because the 1603 program’s primary focus is on domestic renewable energy production, Treasury also does not report on the number of jobs created by the program,” said a March 30 letter to the committee from Richard L. Gregg, fiscal assistant to the secretary of Treasury.

During his March 16 testimony to the committee, Chu praised the program.

“The Section 1603 tax grant program has created tens of thousands of jobs in industries such as wind and solar by providing up-front incentives to thousands of projects,” Chu said. “The Administration is seeking a one-year extension of this program.”

President Obama’s fiscal year 2013 budget proposal would spend another $4.7 billion from 2012 to 2022.

In a report on the grant program published in April, the federal government’s National Renewable Energy Laboratories (NREL) drew a distinction between direct and indirect jobs. Even the estimated 5,500 direct and indirect jobs fell short of Chu’s “tens of thousands” assertion.

“The annual operation and maintenance (O&M) of these PV [solar photovoltaic] and wind systems are estimated to support between 5,100 and 5,500 direct and indirect jobs per year on an ongoing basis over the 20- to 30-year estimated life of the systems,” the NREL report said. “Similar to the construction phase, the number of jobs directly supporting the O&M of the systems is significantly less than the number of jobs supporting manufacturing and associated supply chains (910 and 4,200–4,600 jobs per year, respectively).”

The report goes on to say, “These indirect jobs account for approximately 4,200–4,600 jobs per year for the lifetime of the systems. Onsite jobs directly supporting the service and maintenance of systems (as well as the associated management and administration) account for approximately 910 jobs annually for the lifetime of the systems.”

Before the stimulus, most renewable energy projects were promoted through tax incentives. The Congressional Research Service reported that the 1603 program “results in revenue losses that are greater than the revenue associated with the previously available tax incentives.” The Joint Committee on Taxation projected “10-year revenue losses resulting from the shift from tax credits to grant payments.”

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