It’s official: Long-awaited clean-energy manufacturing tax credits are really happening, finally. The U.S. Department of the Treasury and the U.S. Department of Energy on Thursday announced a program awarding $2.3 billion in tax credits for clean-energy equipment manufacturers.
While there are already some tax credits for renewable-energy generation projects, these new credits are focused on the manufacturing equipment that will be used to make gear for such projects and are intended to make the U.S. a manufacturing hub for clean power equipment. That could mean more jobs — always a good thing in the face of hundreds of thousands of layoffs per month, and an unemployment rate near 9.4 percent. That is, as long as these manufacturers also prove sustainable after the credits.
The Solar Energy Industries Association expects the credits, along with other stimulus provisions, to create 110,000 solar jobs by the end of 2010, according to a statement by CEO Rhone Resch. “This program will attract billions of dollars of investment in manufacturing facilities in the U.S. and will create new jobs in states where they are needed most,” he said, adding that he’s already has seen increased interest in solar manufacturing in the country. “The manufacturing tax credit is crucial for the U.S. to become a major manufacturer of new energy technologies.”
The credits, which were authorized by the American Recovery and Reinvestment Act in February, defray 30 percent of the cost of building factories to make equipment for solar, wind and geothermal energy; fuel cells, microturbines and batteries; electric cars; gear for the electric grid to support renewable-energy transmission; energy-conservation technologies; and greenhouse-gas emission reduction and carbon-dioxide capture or sequestration technologies.
According to the guidelines released today, the DOE and Internal Revenue Service will work together to decide which projects are eligible, based on their expected commercial viability and a ranking determined by a variety of factors, such as their expected job creation, reduction of air pollutants and greenhouse gas emissions, technological innovation and ability to get the project up and running quickly.
Manufacturers don’t have much time to get their applications ready, so it seems likely that only already-planned projects will end up on the table, at least for the initial round of consideration. The application period opens this Friday, with preliminary applications due Sept. 16, followed by final applications due Oct. 16. The IRS will certify or reject applications by Jan. 15, with decisions expected out April 16. More credits could be allocated, depending on the amount of funding that remains after this first round.