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US taxpayers giving $4B to foreign firms for green energy projects, study says

Published January 17, 2013
U.S. taxpayers have forked over nearly $4 billion to foreign-owned companies as part of a stimulus program that pays cash grants to green-energy firms, according to a newly released congressional report.
The report from Republicans on the House Energy and Commerce Committee charged that the Treasury Department-administered program has “failed” in its goal of putting Americans to work.
“Billions of dollars have filled the coffers of overseas firms while the evidence of the promised permanent jobs and economic growth here in the United States is scarce,” the report said. 
The program is separate from the Energy Department fund that gave nearly $530 million to failed solar panel firm Solyndra.
This one sprung out of the 2009 stimulus package, and offers cash payments to alternative energy companies worth 30 percent of any given project’s cost. The money is available for everything from solar to wind to geothermal to fuel cell projects.
According to the report, though, nearly one-quarter of the $16 billion approved to date has been for U.S. subsidiaries of foreign firms. The money went to several Spain-based companies, as well as those in Japan, Germany, France and Italy.
Nearly $1.8 billion, for example, went to various wind energy projects across the country under the U.S. division of Spain’s Iberdrola Renewables, according to the study.
Republican lawmakers say the program is effectively aiding foreign competitors, with money the U.S. government arguably does not have.
“With $16 trillion in debt, we cannot afford to send one out of every four taxpayer dollars overseas for a program that has failed to create the jobs promised,” Rep. Fred Upton, R-Mich., chairman of the committee, said in a statement.
The program, though, nevertheless was funding projects in the United States that largely employed U.S. workers. According to a July 2012 status report, more than 45,000 projects were funded at the time — presumably more have been funded since. The projects have also helped boost the country’s electricity generation from renewable sources.
Nancy McLernon, president of the Organization for International Investment, said the House report mischaracterizes the economic benefit of U.S. subsidiaries.
“U.S. subsidiaries are not rivals of U.S. industry, they’re an important part of it,” she told “This is in-sourcing.”
McLernon said U.S. subsidiaries, across all industries, directly employ 5.3 million people in the U.S., and said the committee report gave a “terribly wrong impression” of their integration with the U.S. economy.
She said U.S.-owned companies likewise can take advantage of certain government aid abroad, but said it’s “very hard to put a flag on a company.”
Energy Department spokesman Bill Gibbons also defended the grant money, saying the program has directly benefited the U.S. economy and boosted U.S. wind power.
“All of the recipients of 1603 funds are U.S. taxpayers and all of the projects funded are located in the United States. Therefore, every single project that has received funds to produce clean energy generation here in the United States is directly creating investment in America and domestic jobs,” he said. “That’s true for every corporate tax credit or deduction — not just the ones that our critics don’t like.”
Previously, renewable energy companies could collect tax credits for their projects — the provision in the stimulus bill turned that into cash payments. The program was then extended through 2011, but money is still being paid out for projects that began during that period.
The so-called 1603 program has also recently come under scrutiny after it was revealed that several solar panel companies were issued subpoenas as part of a federal probe into whether they overcharged for their work in order to squeeze more stimulus money out of taxpayers.
The investigation was revealed last year by one of the subjects in the probe, California-based SolarCity. The company disclosed in an SEC statement that it and others had received subpoenas from the Treasury Department’s Office of the Inspector General. The company has claimed it is not aware of “specific allegations of misconduct” but acknowledged the investigation.

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