American Taxpayer Investment, Foreign Corporation Benefit

This report prepared by the U.S. House Energy and Commerce Committee examines how American taxpayers have paid out nearly $4 billion to foreign-owned companies as part of a stimulus program that pays cash grants to green-energy firms. Republicans on the Committee charged that the Treasury Department-administered program has "failed" in its goal of putting Americans to work.

As part of ongoing efforts to ensure proper oversight of the American Recovery and Reinvestment Act of 2009 (the "Recovery Act"), committee staff has conducted an investigation of the Section 1603 grant program. This program, created under the Recovery Act and designed to support placing specified renewable energy property in service, has been a boon for investors in the wind and solar industries. However, as set forth in a June 18, 2012, committee staff report entitled "Where are the Jobs? - The Elusiveness of Job Creation under the Section 1603 Grant Program for Renewable Energy," the Section 1603 grant program has not been a dependable agent of long-term job creation. In fact, despite the Obama administration's wide pronouncements that 1603 was a jobs program, the committee staff report noted that the Department of the Treasury (Treasury) does not keep track of jobs numbers, and the National Renewable Energy Laboratory's modeling suggests just over 5,000 direct and indirect jobs per year were supported by the $9 billion awarded as of November 2011. Removing indirect jobs, the estimate falls to "910 annually for the lifetime of the systems," astonishingly low figures consistent with those reported by the Wall Street Journal in February 2012.

Committee staff next examined Treasury-reported data on Section 1603 grant awardees to determine who has benefitted from the program to date, and by how much. This review of about $16 billion in Section 1603 grants approved as of December 5, 2012, found that nearly one-quarter of this federal grant funding went to the U.S. operations of a handful of large European and Asian renewable energy corporations. With these grants, foreign companies appear to have unduly benefitted from a program ostensibly aimed at stimulating the U.S. economy, growing American businesses, and creating U.S. jobs.

Further, the Section 1603 grants have only served to reinforce existing trends supporting the global dominance of non-U.S.-based competitors in the renewable energy markets. Although U.S. wind turbine equipment production capacity, as a function of both U.S.-based and foreign-based manufacturers operating domestically, has expanded compared to several years ago,6 at the end of 2010, nine of the top-ten global wind turbine suppliers were headquartered outside the U.S. In fact, the sole U.S. company making the top-ten list, GE Energy, fell to third place with 9.6% market share, having been surpassed by Chinese manufacturer Sinovel, with 11.1% market share. Vestas, a Danish company, continued to hold the leading position among wind turbine manufacturers, with 14.8% market share. Rounding out the top-ten list were wind turbine suppliers from China, India, Germany, and Spain. It is important to note, as an industry source estimated for the committee, that turbine manufacturing presently accounts for approximately 50% of total wind farm costs.

As of December 2012, at least $6 billion remained to be paid out under the Section 1603 program to projects where construction had begun by December 31, 2011.To date, the Obama administration has not met its goal of extending the program through 2012.

20130117 Foreigninvestment

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JAN 17 2013
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