Thomas Friedman, author of Hot, Flat and Crowded, a book that touts green jobs, has argued that a “clean energy bubble” would be a good thing.
Wall Street’s casino has preempted that for now, but there is disturbing new evidence from Oregon this week that green jobs have become the hot new bait for corporate tax scams wrapped in the sheep’s clothing of “economic development incentives.”
“State lowballed cost of green tax breaks,” blared The Oregonian last weekend, reporting that the state’s Business Energy Tax Credit (BETC, known as “Betsy”) is costing the state 40 times what legislators were told when Gov. Kulongoski urged that BETC’s cap per project be drastically increased.
“State officials deliberately underestimated the cost,” the paper reported. An analyst with the state’s Department of Energy said he was told to “keep [the cost projection] conservative.” Instead of $4.1 million, costs are now projected at $167 for this two-year budget and $243 million for the next.
BETC is a lavish investment credit worth 50 percent of the cost of building a renewable energy facility, up to $10 million, and $20 million for a solar project.
The credits are salable, with the state setting the prices and finding “pass-through partners.” One company, Solar World, sold $11 million worth of credits to Wal-Mart for $7.37 million, giving Wal-Mart a 49 percent rate of return over five years.
State Senator Ginny Burdick tried to curtail the credits, but Gov. Kulongoski vetoed her bill. “This very, very worthy program has become one of the most blatant corporate welfare programs I've ever seen,” she said.
“What I find disturbing,” Chuck Sheketoff at the Oregon Center for Public Policy told The Oregonian, “is that very profitable companies and wealthy individuals with tax liabilities are getting a guaranteed return on investment while the typical Oregonian sees his savings depleted.” He recommends abolishing the tax credits and instead writing checks (to make the spending more transparent and accountable) or turning the credits into a state-chartered mutual fund available to all Oregon taxpayers.
Here’s another suggestion I’ve been making for the past two years. Instead of larding on new tax breaks and putting “a lot of eggs in a few corporate baskets” (even wind or solar baskets), let’s attach “green strings” to all of our major economic development subsidies.
For example: cities in Oregon and almost every other state routinely grant property tax abatements to owners of office buildings, warehouses and factories – in the name of economic development.
Yet very few cities say, as a quid pro quo, that new or existing buildings must conform to green building standards. News reports indicate that retrofitting to the U.S. Green Building Council’s so-called “LEED-EB” standard (that’s Leadership in Energy and Environmental Design-Existing Building) pays for itself in just one to three years. Adobe’s headquarters retrofit paid for itself in 10 months, and Harvard University’s revolving loan fund for retrofits returned an eye-popping 35 percent!
Apply this principle to office buildings, factories, hospitals and warehouses and we can create oodles of skilled construction jobs and drive demand for all kinds of green mechanical and building materials.
While Oregon cleans up BETC’s mess, I say: let’s use the dormant power of existing tax breaks to create green jobs, get companies to act in their own self-interest, and reduce global warming air pollution.