The US has seen a surge in the deployment of clean energy in recent years. Tax credits have been important for that growth. Kevin Steinberger writes on the Natural Resources Defense Council website about the wide range of benefits if the tax credits are continued.
Renewable Energy Tax Credits Will Power Economic Growth
The clean energy industry is rapidly growing in America. Costs are going down, carbon emissions are being reduced, and new jobs are being created. This is in large part due to smart tax policies that accelerate this growth.
NRDC has just released a new analysis that shows that the federal tax credit extensions for wind and solar will add over 220,000 jobs and nearly $23 billion to the U.S. economy in 2017.
The recent executive action to begin rolling back the Clean Power Plan is a clear threat to this progress. More than 1000 U.S. based investors and companies, representing $1.2 trillion in annual revenue, have signed a statement to President Trump declaring that a “failure to build a low-carbon economy puts American prosperity at risk.” As the fight to defend climate protections proceeds, the upcoming debate around tax reform presents an opportunity to move forward on clean energy while creating jobs and growing our economy.
In December 2015, Congress passed bipartisan legislation to extend the production tax credit (PTC) for wind and the investment tax credit (ITC) for solar, providing important near-term policy certainty for the clean energy industry. These tax credit extensions will spur new wind and solar projects, create new jobs, and provide substantial climate and public health benefits.
Wind and solar installations represented 65 percent of all new electric capacity additions in 2016. The wind industry currently supports nearly 102,000 jobs, and more than 260,000 U.S. workers spend at least half of their time contributing to the booming solar industry, according to a new report by the Department of Energy. Solar industry employment has nearly tripled since 2010, and the Bureau of Labor Statistics recently projected that wind turbine technician would be the fastest growing job in the country through 2024. With tax policy certainty for the next several years, the wind and solar sectors are well-positioned to continue their rapid growth. Multiple studies have concluded that wind and solar capacity is expected to nearly double from 2015 levels by 2021, as a result of rapidly declining costs and continued state and federal policy support.
Our new analysis isolates the impact of the federal tax credits by examining a scenario in which, all else being equal, the tax credits had not been extended. We find that the tax credits alone will prompt the development of nearly 29,000 megawatts of additional new utility-scale wind and solar capacity in 2020, enough to power nearly eight million homes and 23 percent greater capacity than in the No Tax Credits scenario.
Wind and solar growth will also result in new jobs in the clean energy industry, bringing overall net benefits for the economy. The boost in clean energy production fueled by the tax credits will spur more jobs for construction workers, solar installers, wind turbine engineers, and related jobs across the clean energy industry, and will stimulate local economies across the country. In addition to the projected net increase of more than 220,000 jobs across the country in 2017, our analysis shows an average annual employment gain of over 80,000 jobs over the next decade. The tax credits will also add over $20 billion in value to the U.S. economy in 2017 and 2018, and add an average of over $11 billion over the next decade.
The states examined in our analysis are projected to see significant benefits to their economies as a result of the federal tax credit extensions.
Iowa, already fourth in the country in wind jobs, is likely to see additional job creation driven by the boost in wind growth in the region, and its economy stands to gain more than 3,300 jobs each year in 2017 and 2018. Nevada, home to some of the cheapest solar power in the country, is projected to add more than 1,400 jobs in both 2017 and 2018. Ohio adds more than 10,000 jobs in 2018, and the state’s gross domestic product (GDP) is expected to get a boost of nearly $1.2 billion that year. Pennsylvania is projected to gain nearly 9,300 jobs each year in 2017 and 2018, and its GDP gets a boost of more than $1 billion per year. In Virginia, the state gains about 5,000 jobs per year in 2017 and 2018.
The benefits of a clean energy economy are clear and growing. Tax policy has long played an important role in the energy sector, and any adjustments to the tax code should take into account the significant economic, public health, and climate benefits of clean energy. The tax credit extensions will have the largest impact over the next few years until they phase out, but additional policies to accelerate clean energy deployment beyond 2020 would most likely lead to even stronger, more persistent job gains and economic growth.
The time is ripe to further accelerate our urgently needed transition to a low carbon economy. Going backwards only stifles this economic growth, new job opportunities, and our ability to protect Americans from the dangers of climate change. Federal and state policymakers should seize the tremendous economic development opportunity that clean energy represents.