In the wake of a new report revealing that a clean-energy grant program in the stimulus has paid out more than $1 billion to foreign manufacturers, U.S. Senators Charles E. Schumer (D-NY), Bob Casey (D-PA), Sherrod Brown (D-OH) and Jon Tester (D-MT) urged the Obama administration Wednesday to suspend the program indefinitely until the law can be fixed so that funds only flow to projects that will create jobs in the United States.
In a letter to Treasury Secretary Tim Geithner, the senators pushed for a moratorium on all payouts from a clean-energy grant program until Congress can consider new legislation that they introduced Wednesday.
That new proposal would require that aid flow only to clean-energy projects that rely on materials manufactured in the United States and create the bulk of their jobs here at home, rather than overseas. If approved, the legislation would stop payments to projects like a controversial wind farm in West Texas that is on the verge of receiving $450 million in stimulus funds even though most of the jobs created by it will be in China.
Administration officials have said they do not have the authority to prevent that payment. If the aid goes through, it would be just the latest example of a larger trend, according to an independent report conducted last month. The Investigating Reporting Workshop found that 79 percent of the $2 billion in grants doled out by the clean-energy program in the stimulus so far went to foreign companies.
The four senators said this flow of stimulus dollars overseas must be stopped.
“It is a no-brainer that stimulus funds should only go to projects that create jobs in the United States rather than overseas,” Senator Schumer said. “These wind projects have a lot of merit, but the manufacturing should be happening here, not in China. The administration hasn’t committed to denying this project from receiving funds, so we will act instead. Our domestic clean-energy sector has the potential to emerge as a global leader and it is counterproductive to invest U.S. stimulus funds in Chinese companies rather than our own. We should not be giving China a head start in this race at our own country’s expense.”
“It’s simple: The American Recovery and Reinvestment Act should reinvest in America and help America and American workers recover,” said Senator Casey. “For example, one wind turbine manufacturer in Pennsylvania laid off workers last year because they didn’t have enough orders. Thanks to a Recovery bill project announced two weeks ago, some of those Pennsylvanians will be hired back. If we increase work orders, we can put Americans back to work.”
“We cannot sit idly by while China races to the forefront of clean energy production at the expense of U.S. manufacturing, U.S. jobs, and U.S. energy independence. And we certainly can’t shoot ourselves in the foot by helping to finance Chinese clean energy production. Taxpayers expect the government to use their dollars to support American jobs. This legislation ensures that will happen,” Senator Sherrod Brown said.
“I voted for the Recovery Act because we need to get our economy turned around and the way we do that is by investing in infrastructure and new technologies. Supporting wind production here at home will help lead to American energy independence while creating good paying jobs,” said Senator Tester.
The $1.5 billion West Texas project took a step forward two weeks ago when the Chinese government gave it final approval. The Chinese-based manufacturer will now begin shipping foreign-made turbines to Texas this month. The project’s organizers have said since November that they will seek to defray up to 30 percent of the project’s cost, or $450 million, with funds authorized by the American Recovery and Reinvestment Act (ARRA).
Schumer has been trying to block the project from receiving any stimulus aid. In November, he sent a letter to U.S. Energy Secretary Dr. Steven Chu, demanding that the project receive no stimulus dollars unless it relied on American-built products rather than the Chinese turbines. The Energy Department responded that it was powerless to stop the project from receiving federal aid.
The project is a joint venture comprised of China’s Shenyang Power Group, a Texas company called Cielo Wind Power and the U.S. Renewable Energy Group. It would build a 648-megawatt wind farm in west Texas, covering 36,000 acres. The electricity generated by this wind farm will be enough to power 135,000 to 180,000 American homes every year.
The senators said the project was certainly worthwhile, but it should not be eligible for stimulus funds since it did not rely on U.S. manufacturing. While the project is anticipated to generate as many as 3,000 jobs in Shenyang, China—which, according to the project’s announcement, will be the main site of the wind turbines construction—its job impact in the United States will be roughly one-tenth that amount. According to the New York Times, the project will only generate 330 jobs in the United States—and 300 of those are temporary positions.
The new legislation unveiled Wednesday would make this project, and others like it that do not have a substantial job impact in the United States, ineligible for stimulus dollars.
Under the so-called “Buy American” provision contained in the ARRA, government projects financed in part by the stimulus must, with few exceptions, rely on iron, steel and manufactured goods produced in the United States. But the provision does not impose a similar requirement on private projects, such as the proposed wind farm in West Texas, that seek stimulus grants. The proposal announced by the four senators today would apply the “Buy America” standard to all renewable energy projects, no matter public or private, that seek stimulus funds. The proposal also would ensure that grant money is distributed only to renewable energy projects that preserve and create jobs in the United States.
The new push to improve the stimulus was hailed by leaders from two top U.S. manufacturing unions.
“The efforts of Senator Schumer and his colleagues will help make sure that the promise of green jobs doesn’t turn out to be just another empty promise. Energy is critical to America’s future and we should ensure that domestic manufacturers help fuel the future development of this sector,” said Leo W. Gerard, International President of the United Steel Workers (USW).
“Stimulus money should be targeted at creating jobs here at home, not in China. We commend Senator Schumer and his colleagues for providing much needed legislation which will lead to closing the door on projects like those that led to the Texas wind farm fiasco,” said International Association of Machinists and Aerospace Workers President, R. Thomas Buffenbarger.
A copy of the senators’ letter to Geithner appears below. A version of the letter was also sent to Chu.
The Honorable Timothy F. Geithner
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
March 2, 2009
Dear Secretary Geithner,
A recent report highlights the distressing fact that Recovery Act funds are being used to finance wind and other clean-energy projects that source major components and create manufacturing jobs overseas. We propose to stop Treasury from using American taxpayer dollars to support foreign manufacturers and foreign jobs, and respectfully request that you place a moratorium on distribution of section 1603 grants until our legislation becomes law.
The purpose of the Recovery Act was to jump-start the U.S. economy to create and save jobs – American jobs. Our bill, the American Renewable Energy Jobs Act, would do just that by amending the Recovery Act to ensure that stimulus funds are distributed only to clean-energy projects that preserve and create jobs in the United States. The legislation also would make the section 1603 grants subject to Buy American provisions.
We are deeply concerned that the United States is falling behind our trading partners in wind and other clean-energy investment. A February 8th report by Russ Choma at the Investigative Reporting Workshop shows that 73 percent of the $1.9 billion in section 1603 wind-energy grants distributed by the U.S. government since September 1, 2009, have gone to foreign-owned companies. The majority of turbines purchased with that money have been built by foreign manufacturers – of the 28 wind farm projects that have received grants to date, 1219 of the 1807 wind turbines installed were built by foreign manufacturers. Most of economic activity created by investing in wind energy comes from the turbine manufacturing, which means that the bulk of the wind-related manufacturing jobs financed by section 1603 grant money are being created overseas. This is not the intended use of Recovery Act funds.
Our legislation would help reverse this trend by ensuring U.S. government support is focused on the domestic clean-energy industry. Companies located in New York, Pennsylvania, and elsewhere across the United States are fully capable of manufacturing the range of clean-energy components, and U.S. wind farms and other clean-energy projects financed with stimulus money should be buying American-built parts.
A critical Recovery Act priority is investment in the domestic renewable energy industry, not investment in foreign manufacturers. We believe Treasury has the discretion to consider domestic job preservation and creation when distributing section 1603 grants for wind and other clean-energy projects. Grant programs by their very nature require discretion because there are limited funds available. If Treasury chooses not to exercise its discretion, we respectfully request that you defer distribution of section 1603 grants until after our legislation becomes law.
Thank you for your time and attention to this important issue.
Charles E. Schumer, United States Senator
Robert P. Casey, Jr. , United States Senator
Sherrod Brown, United States Senator
Jon Tester, United States Senator
© 2010, Tracey de Morsella. All rights reserved. Do not republish.