New Tax Credit Will Encourage Green Collar Jobs in New Mexico
ALBUQUERQUE – U.S. Senators Jeff Bingaman and Tom Udall today announced that the Departments of Treasury and Energy have outlined plans for how manufacturers of green energy technology can access $2.3 billion in tax credits to create new U.S. jobs.
The credit, authorized in the American Recovery and Reinvestment Act, is intended to help stimulate America's economy by making the United States a more attractive location for manufacturers of solar, wind and other green technologies. This $2.3 billion investment in clean energy will pay significant dividends in the form of "green jobs," bulking up America's industrial base and boosting the production of homegrown renewable energy.
As Chairman of the Senate Finance Subcommittee on Energy, Natural Resources and Infrastructure, Bingaman took the lead in designing this tax credit and working to ensure the credit was included in the recovery package.
"Domestic demand for renewable energy technologies has grown rapidly, and we anticipate even faster growth in the immediate future," Bingaman said. "New Mexico has a growing cluster of established and start-up solar companies that include Schott, Advent, Emcore, Sapphire, Signet, Skyfuel, Sundrop, and eQSolaris, to name a few. This new incentive will help those companies expand right here in New Mexico, while encouraging additional companies to consider manufacturing their clean tech products on American soil – and ideally in our state."
"Creating American Jobs in the clean energy manufacturing industry is the key to rebuilding our economy and putting our nation on a path of energy independence," said Udall. "These tax incentives for manufacturers will help feed New Mexico's burgeoning renewable energy industry and I commend Senator Bingaman for shepherding the creation of such a valuable program in the Recovery Act."
Under the Treasury Department's program, companies that manufacture clean technology products in the United States can apply for a tax credit allocation. Successful applicants will be able to reduce their taxes by 30 percent of the amount they invest in establishing, expanding or retooling manufacturing facilities. The credit is capped at $2.3 billion, sufficient to leverage $7.67 billion in domestic capital expenditures.
Bingaman's credit is notable because it is the first advanced energy credit that is not concentrated downstream – at the commercial or individual consumer level. While those incentives have created some U.S. jobs, such as in installation, most advanced energy technologies that are installed in the United States continue to be manufactured overseas. One major driver for this overseas manufacturing is the significant tax incentives that other countries offer. For instance, Malaysia and the Philippines offer solar photovoltaic manufacturers income tax holidays, for 15 years in the case of Malaysia, while Germany offers them up to 50 percent of investment costs. As a result, the U.S. is far behind, and is falling further behind, in "clean tech" manufacturing. A recent New America Foundation report found that in 2008, the United States ran an overall "green trade" deficit of $8.9 billion. According to one recent study, Japan represents 45 percent of global solar cell production while the United States accounts for just 9 percent. And European manufacturers now account for more than 85 percent of the global wind component market.
But just as the U.S. is losing ground in advanced energy manufacturing, we can anticipate rapid near- to mid-term growth in domestic demand for renewable energy technologies. This credit ensures that added demand will not be satisfied by imports – and that the United States can become an exporter of renewable energy technologies.