By Yael Borofsky, Breakthrough Fellow

Last Thursday, the Department of Energy announced a boost for the advanced energy manufacturing industry in the form of a $2.3 billion Advanced Energy Manufacturing Tax Credit (MTC). The MTC is authorized under the American Reinvestment and Recovery Act of 2009 (ARRA), otherwise known as the $787 billion economic stimulus package.

Intended to expand the clean energy domestic manufacturing industry, the MTC provides a 30% credit for investments in advanced energy manufacturing facilities that either are new, expanded, or re-equipped. The $2.3 billion in MTCs will stimulate 7.7 billion in total capital investments in new renewable and advanced energy manufacturing projects. By fostering growth of the clean energy manufacturing industry, this investment will enforce and enhance ARRA's larger purpose - boosting economic growth, creating jobs, and securing "American leadership in the clean energy sector" - all while helping reduce greenhouse gas (GHG) emissions.

According to Energy Secretary Steven Chu:

These tax credits will help create thousands of high quality manufacturing jobs in some of the highest growth segments of the economy. This is an opportunity to develop our global leadership in clean energy manufacturing and build a secure, sustained base of jobs for America's workers.

The application process to receive the tax credits began last Friday and the preliminary deadline is September 16, 2009. Applicants will be offered tax credits based on expected commercial viability, and rankings of expected job creation, reduction of pollutants and GHGs, technological innovation, and speed of project implementation.

In order to be eligible for the tax credit, projects must be completed within four years of receiving acceptance and must be focused on creating the manufacturing facilities to support at least one of the following:

• Technologies that create energy from renewable resources (sun, wind, geothermal and other renewable resources)

• Energy storage technologies (fuel cells, microturbines or other energy storage systems used in electric vehicles)

• Advanced transmission technologies that support renewable generation (including storage)

• Renewable fuel refining or blending technologies

• Energy conservation technologies (advanced lighting, smart grid)

• Plug-in electric vehicles & vehicle components (motors, generators)

• Property to capture and sequester carbon dioxide

• Other property designed to reduce greenhouse gas emissions

Put in context of other recent ARRA allocations to the clean energy sector, such as the $2.4 billion given to electric vehicle and advanced battery research, the stimulus plan is beginning to inject much needed monetary support to the clean energy industry - even if it is short-term.

This type of investment is consistent with Breakthrough's recommendations to make clean energy cheap and its support of Senator Sherrod Brown's Investments for Manufacturing Progress and Clean Technology (IMPACT) Act of 2009. The bill, which Senator Brown formally introduced last week, is designed to create a two-year, $30 billion revolving loan fund to aid small and medium-sized American clean energy manufacturers.

The MTC and IMPACT offer the types of investments necessary to support clean energy manufacturing and production, however, they are short-term measures that do not provide the kind of long-term funding security that is desperately needed in the clean energy sector. These investments must be augmented by future energy policy that secures long-term dependable investments in clean energy manufacturing and production in order to nurture the growth of a clean energy economy and maintain American competitiveness in the clean energy race.