National Law Helps Germany Attract US Clean Tech Jobs

In this week's issue, Businessweek is calling Germany a "global powerhouse in green energy" because of its cutting edge tech and government incentives. The country now produces more wind energy than any other nation -- wind supplies 7% of Germany's electricty needs.

But the clean energy supply is only half the story. The other half is about the booming economic development that has resulted from supportive government policies -- the nation's energy law guarantees price supports for wind and solar energy.

Now, as oil prices surge and global warming concerns fuel demand for green energy, Germany is seeing the payoff.

The sector—both energy suppliers and equipment manufacturers—employs more than 235,000 people and generates annual sales upwards of $33 billion, government figures show. Nearly 60 companies in Germany specialize in wind systems....Nearly 100 companies manufacture solar cells or supply the sector, with more than half of those in the old East Germany, which has earned the nickname Solar Valley.

And that's why leading US companies are locating their manufacturing operations in Germany:

• Phoenix-based First Solar, opened a $170 million solar-module plant near the Polish border.
• GE makes wind turbines in Germany, at a plant near the Dutch border, where production is expanding.
• Solar wafer-maker EverQ, backed by Evergreen Solar of Massachusetts, has opened two factories since 2006 that emply 800 people.

These are just a few of the "slew of foreign outfits investing in renewables in Germany," the magazine reports.

Germany's example is one Congress would do well to examine as it gets set to push through an economic stimulus package. Provisions include continuing tax breaks for domestic renewable energy companies, which last year enjoyed unprecedented growth. Without an extension of the tax credits, the sector is expected to contract substantially.

Here's the latest on the state of play from the Associated Press:

....as it emerged this week from the Senate Finance Committee, among the items added was a string of energy tax credits aimed at helping people lower their heating and cooling costs and give a boost to wind and solar energy industries.

The efficiency measures — including tax credits for retrofitting homes with more energy efficient windows, insulation and furnaces — expired in December. The other tax breaks are set to die out at the end of this year. The economic package would extend all of the credits to the end of 2009.

Wind and solar industry lobbyists and energy efficiency advocates have pushed for the tax extensions, which have bipartisan support, but efforts to get them into the energy bill enacted just before Christmas failed because of an unrelated dispute over taxing large oil companies.

With lawmakers facing political pressure to respond to the threats of an economic recession, the stimulus package was seen as a way to prolong the energy tax breaks.

"The stimulus package should underscore the nation's commitment to energy efficiency and alternative energy," said Iowa Sen. Charles Grassley, the top Republican on the Senate Finance Committee, arguing for including the tax incentives, despite GOP leaders' opposition to adding to the $161 billion House bill.

Although the energy tax provisions would be extended only to the end of 2009, if they were to continue over 10 years the cost to the government would be $5.75 billion, according to the Finance Committee.

"Investors need certainty. They won't put their money out for a wind energy facility unless there's a reasonable expectation that tax incentives will continue into the future," said Grassley.

The bill includes incentives to spur production of wind farms, biomass energy plants and investments in solar energy plants. It also includes a tax break for making the most efficient appliances and for ultra-energy efficient residential and commercial buildings.

It also would provide tax credits up to $500 to reduce the cost of installing insulation, more efficient furnaces and windows in homes. Approved by Congress in 2005, these credits expired at the end of December just as consumers faced huge increases in fuel costs for winter heating.

Germany applied these kinds of economic stimulus measures -- and much more -- long ago, and is enjoying the results. For the US, it's now a case of better late than never.

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