The Subcommittee on Oversight and Investigations recently released a scathing memo on Section 1603 of the Obama stimulus plan.
The grant program, administered by the Department of Energy, was frequently touted as a way to create “green jobs” while simultaneously benefiting the environment. Yet the new memo documents that the program was a complete flop on the jobs front, which should come as no surprise.
The Scope and Alleged Benefits of the Program
Section 1603 offered cash payments in lieu of tax credits to qualifying renewable energy projects. Since it’s always better to get cash sooner rather than later, the idea was to provide an even greater incentive for firms to invest in so-called clean energy technologies. Through March 15, 2012, more than $11 billion had been awarded to 34,140 separate projects. Of this total, $8.2 billion in grants had been awarded to wind projects, $2.0 billion went to solar, and about $920 million went to geothermal, biomass, and other alternative technologies.
When the Obama Administration pushed through the American Reinvestment and Recovery Act (aka “the stimulus package”), it was typical for proponents to claim that the measures killed two birds with one stone. On the one hand, federal incentives for renewable energy projects were supposed to be good policy because of the threat of climate change. Yet at the same time, supporters promised Americans that these policies also made sense on a purely economic level, since the new investments would fuel growth in sustainable “green jobs” and help pull the nation out of its terrible slump.
Even after the lackluster performance of the stimulus package, officials touted this familiar line. For example, on March 16, 2011 Secretary of Energy Steven Chu claimed “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.”