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 December 17, 2009
White House set to increase clean energy tax credits by $5bn

 Huge increase in tax breaks proposed for manufacturers in the wind, geothermal and solar sectors in the US as part of wider job creation programme. The White House is proposing a $5bn (£3bn) increase in clean energy tax credits as part of a push to spur green collar job growth and expand US renewable energy capacity.

The proposal, unveiled yesterday by vice president Jo Biden, would extend existing tax breaks for manufacturers in the wind, geothermal and solar sectors in the US, raising the current $2.3bn cap on tax credits to $7.3bn.

If Congress approves the initiative, new or expanded factories that make products such as wind turbines, solar panels and electric vehicles would get a 30 per cent tax credit.

Vice president Biden said the first round of tax credits had proved an " overwhelming success" and that there were more qualified applicants than expected.

"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," he said in a statement.

The administration received more than 1,000 applications for the initial $2.3bn round of tax breaks. Of these, 600 were granted tax credits, but a large number of eligible proposals are thought to have been rejected due to the cap on the amount of money available. The successful applicants will be announced early next year.

The White House said the money for the new tax credits would come from $200bn in savings from the bank bailout fund, which the administration has extended until next year.

The plan also calls for increased investment in public works, small business tax cuts and incentives for homeowners who retrofit their houses to be more energy efficient.

In addition to the tax break announcement, Biden's office also released a progress report this week on the US transformation to a clean energy economy.

It stated that by the end of next year the country will be committed to more than 15GW of new wind, solar and geothermal energy capacity, adding that the Department of the Interior has fast-tracked 30 renewable energy projects on federal lands in recent months.

It also said that $16bn of support for the electric car industry will mean three new electric vehicle plants and 30 new battery and other electric vehicle manufacturing plants will be opened in the next six years.

Meanwhile, new efficiency standards on appliances and white goods are being introduced at a rate of six a year and a programme to improve the energy efficiency of the homes of half a million low-income Americans will also be finished by the end of 2010, the vice president's office said.

The announcements are part of a US charm offensive designed to convince countries at the Copenhagen summit this week that the administration is fully committed to delivering cuts in carbon emissions.

The US has faced fierce criticism in recent days for failing to commit to sufficiently ambitious emission reduction targets or table an overall funding pledge to help poorer countries cope with climate change.

In an indication of the growing tensions at the talks, German chancellor Angela Merkel yesterday sided with poorer nations in criticising the US commitment to cut emissions by just four per cent on 1990 levels by 2020, arguing the target was "not ambitious".

Tom Young, BusinessGreen