WASHINGTON, DC – The Energy and Commerce Subcommittee on Oversight and Investigations today released the report, “Where are the Jobs? – The Elusiveness of Job Creation under the Section 1603 Grant Program for Renewable Energy.” In March, full Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) launched an inquiry into the $10 billion program as it became clear that accurate jobs data was difficult to find despite the administration having already spent billions of dollars and asking for billions more to extend the program. Information gathered by the committee reveals that job creation is an afterthought of the Section 1603 program and that most current methods used to calculate jobs created by Section 1603 are largely unreliable. What accurate jobs data exists for Section 1603 shows that it produces very few long-term jobs at a high per-job cost to taxpayers.
Upon release of the report, Subcommittee Chairman Cliff Stearns stated, “To this day, we continue to ask, ‘Where are the jobs?’ It defies belief for the Obama administration to have sold the 1603 stimulus program as a jobs program even though creating jobs was not even a determining factor in awarding the billions of dollars in grants. What’s worse, President Obama now wants billions to extend the program. As we endure 40 consecutive months of greater than eight percent unemployment and are confronted with a near $16 trillion debt, we should not be doubling down on bad bets that fail to create jobs. We need to restore a dose of sanity to the administration’s rampant spending.”
According to the report, “The Section 1603 grants program is a prominent example of a stimulus program that has failed to create the jobs promised by the Obama administration. With about half the $22.6 billion Section 1603 funds already paid out, the Section 1603 program has treated job creation as little more than an afterthought. To produce evidence of Section 1603’s success in creating jobs, unreliable estimates of job creation have been generated using formulas and computer models rather than citing actual employment data. Where available, estimates of actual numbers of long-term jobs created are often both small – in the hundreds or lower – and disproportionate to the millions of dollars in Federal grants made. Overall, reliable job figures have been difficult to come by, raising serious doubts about the advisability of the administration’s efforts to extending this unproven and costly program.”
The administration has touted the more than $10 billion handed out in 1603 grants as a jobs program, and Secretary of Energy Steven Chu previously claimed that it “has created tens of thousands of jobs in industries such as wind and solar.” However, multiple reports have previously questioned figures detailing temporary and permanent jobs spawned by the Section 1603 grant program. In a November 2011 study, the Congressional Research Service wrote, “quantifying and measuring green job creation and growth has been difficult” and added that “it is recommended that any job creation estimate be viewed with skepticism.” A Wall Street Journal investigation found problems with accounting for the number of jobs created by the 1603 program, finding “evidence of far fewer (jobs). Some plants laid off workers. Others closed.”
Among the report’s key findings on the Section 1603 program:
- Treasury stated that it does not consider job creation when awarding the Section 1603 payments: “…job creation is not one of the statutory requirements for eligibility and thus it is not a factor in the consideration process. Because the 1603 program’s primary focus is on domestic renewable energy production, Treasury also does not report on the number of jobs created by the program.”
- DOE echoed Treasury, but also referenced estimates contained in a National Renewable Energy Laboratory (NREL) report. The operation and maintenance of photovoltaic and wind energy systems, in which around $8 billion of Section 1603 funds were invested, were estimated to support just over 5,000 direct and indirect jobs per year over the lifetime of the systems. Removing indirect jobs, the estimate falls to “910 annually for the lifetime of the systems,” alarmingly low figures consistent with those reported by the Wall Street Journal in February 2012.
- The job creation numbers that exist for Section 1603 are based on models, not actual data from completed projects. Neither Treasury nor DOE have turned over actual jobs data on the Section 1603 grants program to the Committee.
- Over $11 billion in federal grants have gone out the door and at least another $11 billion are yet to be paid out, according to government estimates. Outlays from extending the program, under the President’s FY 2013 budget proposal, would add another $4.7 billion in outlays over 2012-2022.
Read the entire Staff Report HERE.