State Bills Offer More Taxpayer-Backed ‘Green’ Giveaways

March 19, 2013

Investigative Reports

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Clean EnergyTwo bills in the S.C. General Assembly would make it easier for “clean”-energy producers to receive state incentives by expanding the definition of eligible companies and lowering investment and job-creation requirements.

S. 525, which was introduced Wednesday by Sen. Paul Campbell, R-Berkeley, has a companion bill (H. 3644) sponsored by Rep. Dwight Loftis, R-Greenville, and introduced Feb. 27.

H. 3644 was first referred to the House Labor, Commerce and Industry Committee. It has since been referred to the House Ways and Means Committee.

The bills would create the “South Carolina Clean Energy Tax Incentive Program” through 2019, expanding the definition of what qualifies as clean energy and liquid fuels derived from “natural sources.”

“We want to see more of our energy coming from clean-energy sources,” Campbell told The Nerve last week. “I would like us to have as much clean energy as possible.”

Sen. John Scott, D-Richland, is among seven co-sponsors of the Senate bill.  He told The Nerve that he supports solar and wind energy.

“It deserves the merit to have a discussion,” Scott said of the clean-energy bill.

State law already allows solar, wind and geothermal energy sources, but S. 525 and H. 3644 would add, among other things, hydrogen and small modular nuclear reactors to the clean-energy list.

The bills would offer job tax credits based on a minimum financial investment, the number of full-time jobs created and the location of the company.  Under current law, renewable- energy companies must invest a minimum of $500 million in any county to receive the credits.

The two bills would lower the investment bar based on the wealth of the county in which the eligible company would be located. For Tier IV counties, which are the 12 poorest counties in the state, the minimum investment amount would be $50 million. For the 12 Tier III counties, the minimum investment would be $100 million; for the 11 Tier II counties, $150 million; and for the 11 wealthiest Tier I counties, $200 million.

The tax credit for each new full-time job added would be:

  • $4,000 in Tier IV counties;
  • $2,125 in Tier III counties;
  • $1,375 in Tier II counties; and
  • $750 in Tier I counties.

The bills also would lower job-creation requirements from three jobs for every $1 million in investment to one job for every $1 million in investment.

S. 525 and H. 3644 would expand the definition of liquid fuels beyond the current “corn-based ethanol” or “soy-based ethanol” uses. Under the bills, it would include anything derived from “algae, cellulose, corn, natural gas, soy, used oil, waste oil or yellow grease.”

Under current law, companies that produce at least 25 percent of its production capacity in corn-based ethanol or soy-based biodiesel fuels can receive a tax credit of 20 cents a gallon. Under the proposed changes, facilities that produce non-corn or non-soy biodiesel fuels would be eligible for a tax credit of 30 cents a gallon under the same stipulations through 2019.

Beginning Jan. 1, 2020, eligible companies could receive a tax credit of 7.5 cents per gallon over the following three years. The bills also would lower the number of gallons eligible for the credit to 10 million gallons annually from 25 million gallons.

Campbell said he likes the approach of “all of the above” for energy options, which, for him, would include nuclear, oil and natural gas, The senator also said he supports off-shore oil drilling in the Atlantic Ocean.

“I want to be one of the leaders of this technology,” Campbell said of liquid fuels.

“We’ve got to be in the game; otherwise, we’ll be settling for sending raw materials” to other states, Campbell said of the materials needed to produce liquid fuels.

“I haven’t heard of any other state adding biofuels (to renewable-energy laws),” Simon Mahan, the renewable-energy manager of the Knoxville, Tenn.-based Southern Alliance for Clean Energy, told The Nerve Monday.

“It’s a bit of a pleasant surprise with what is happening in South Carolina,” Mahan said.

The Columbia-based South Carolina Clean Energy Business Alliance (SCCEBA) conducted a survey of the green-energy industry in the state in 2011.

The nonprofit group reported that South Carolina lost 133,000 jobs between December 2007 and December 2009, and clean-energy businesses generated 17,292 jobs, according to the study, which was provided to The Nerve last week.

The SCCEBA report also said clean-energy businesses generated more than $726 million in gross revenues in 2011, with 56.2 percent generating annual revenue of less than $1 million.

“Access to financial incentives were reported as ‘very important’ or ‘important’ to 83.2 percent of all firms,” the SCCEBA report stated. “This was followed by state regulatory structure (75.2 percent) and access to finance (74.7 percent).”

Mahan said those who chastise tax incentives for clean energy don’t account for the subsidies given to gas and oil companies.

“All forms of energy have received some form of government subsidy,” Mahan said.

He said a full-scale elimination of energy subsidies must account for the costs of pollution and health impacts related to fossil fuels.

Campbell said those who argue against tax incentives fail to see the efficiencies that develop from better technology.

“New technology is going to drive that cost down,” Campbell said.

The bills also create the “Clean Energy Industry Manufacturing Market Development Advisory Council” at the S.C. Department of Commerce. The 14-member panel comprised of the secretary of Commerce, or his designee, would be joined by industry representatives. The council would produce an initial report by Oct. 31, 2014, that establishes a clean-energy plan for the state.

Olson can be reached at (803) 254-4411 or curt@thenerve.org. Follow him on Twitter @thenerve_curt and @olson_curt. Follow The Nerve on Facebook and on Twitter @thenervesc.