The House of Representatives Tries Again, Calling for Economic Relief for Renewables
Recently, several members of the House of Representatives (the “House”) sent a letter requesting economic relief for the renewable energy industry, which has been severely hit by the COVID-19 crisis. Prior to the pandemic, the renewable energy industry employed approximately 3.4 million people. The letter, which was addressed to House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer, highlights the difficulties that are disproportionately borne by the renewable sector. Specifically, since the pandemic began, renewable energy jobs have been disappearing faster than the national average for all jobs, with recent economic analysis establishing that over 27,000 jobs have been lost solely in the month of May. That report puts the total number of jobs lost across the industry at more than 620,000 since the pandemic began in March. Those figures constitute nearly 18.5% of the industry’s workforce. As noted in our previous alert, wind and solar power are some of the fastest growing industries, and the COVID-19 pandemic continues to threaten and jeopardize this growth. The letter to House leadership proposes that Congress include renewable energy in any future economic stimulus package to help stem this massive loss of jobs and set the foundation for a stronger, cleaner and more resilient economy tomorrow.
Despite the reopening of states and businesses, unemployment claims continue to rise, and the renewables industry is sadly on the path to continue these job losses through June. As noted in our previous alert, many renewable energy projects have been delayed due to disruptions to supply-chains, capital, and construction while also facing upcoming federal tax credit deadlines and potential loss of these tax credits.
This results in a Catch-22 situation due to the project pipeline problem that these developers are facing: If they do not have projects to work on, then these developers are not able to keep their workers employed. As such, many developers are addressing this situation by reducing investment in these projects rather than rehiring laid-off workers. The letter to House leadership suggests that legislation be enacted that will provide more relief and more certainty for tax equity financing by delaying the phasedown of existing federal renewable energy tax incentives and allow these tax credits to be received as direct payments. By advocating for specific economic relief measures that will help the renewable industry to weather the COVID-19 crisis, not only will these benefits be seen by the American people, it is also reminiscent of what occurred during the Great Recession of 2009. In response to that economic downturn, Congress established the Section 1603 cash grant payment in lieu of federal tax credits program to increase investment in renewable energy during a time when a grant was more useful than these tax credits to investors who did not have sufficient tax liabilities to make these credits economically-viable.
During the pandemic, consumption of renewable energy has surpassed that of coal as this highly infectious, airborne disease still plagues us. Due to the respiratory nature of the virus, experts are advocating, among other measures, for the need for more fresh air to combat COVID-19. On the legislative front, as of today, some comprehensive renewable energy tax policies exist; however, none of it has yet been enacted. For example, a provision of the Growing Renewable Energy and Efficiency Now (GREEN) Act, that the House Ways and Means Committee released last November, proposes a federal tax credit extension package as possibly the best chance to enact measures that can accelerate renewable energy development and reduce greenhouse gas emissions. Under the GREEN Act, Congress would authorize a “direct pay” option similar to the Section 1603 grants, and the Moving Forward Act similarly advocates for development of renewable energy by providing for new incentives. Both proposals would enable renewable energy developers the time to re-establish their construction timelines in order to help these developers qualify their projects for federal tax credits before these credits phasedown or ultimately expire.
Without significant intervention from Congress and/or state governments, continued job losses will continue to plague renewable energy development and ensure the renewable energy sector’s inability to return to its economy-leading jobs growth. This has all cumulated in lawmakers placing increased pressure on the House leadership to include financial help for renewable energy in any upcoming legislation. Congress needs to include renewable energy in any future economic stimulus package to help curtail the massive loss of jobs and establish the foundation for cleaner air and a more resilient economy.
The COVID-19 pandemic has caused unprecedented hardship to renewable industry workers, whose job losses more than tripled over the past month. Congress can help these Americans to get back to work, while also helping our economy to get back on track, by employing relief for time-sensitive federal tax credit deadlines and a temporary refund or grant for federal renewable tax credits that are increasingly difficult to monetize. As Representative Mike Levin noted, “we cannot forget about the [renewable] energy workers who are so desperately needed to help combat the climate crisis and protect our planet for future generations….With more support and resources for [renewable] energy, we can save thousands of good American jobs, create new ones, and ensure that we don’t go backward in our fight against the climate crisis, but we must act now.”
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