Senators propose "buy American" amendment to green stimulus package

Four US senators have this week announced legislation that would amend last year's stimulus package so that it focuses solely on green projects that support American companies.

The group of Democrat senators has written to the US Treasury criticising the stimulus package for siphoning money to overseas companies.

The letter, written by senators Charles E Schumer, Bob Casey, Sherrod Brown and Jon Tester, proposed new legislation called the American Renewable Energy Jobs Act, which would amend the American Recovery and Reinvestment Act, which last year released $800bn (£532bn) in new investment designed to kick-start the US economy.

The amendment would force the Department of Energy and the Treasury to award stimulus funds only to clean energy projects that preserve and create jobs in the US. More than $100bn of the existing stimulus package has already been earmarked for low-carbon initiatives, with the Treasury pumping millions into R &D grants, energy efficiency projects, and tax breaks and loan guarantees for renewable energy developments. However, it has been criticised in some quarters for supporting non-US firms importing green technologies, such as wind turbines and electric cars, into the country.

"We propose to stop Treasury from using American tax payer dollars to support foreign manufacturers and foreign jobs, and respectfully request that you place a moratorium on distribution of section 1603 grants until our legislation becomes law," the senators said in their letter to the Treasury. Section 1603 of the Recovery Act allocates grants for energy property in lieu of tax credits.

The senators cite a report produced by the Investigative Reporting Workshop, an American University School of Communication project. According to the report, $1.7bn of stimulus money awarded to clean energy projects has gone to foreign companies. Conversely, just $500m has been awarded to domestic firms.

"Our legislation would help reverse this trend by ensuring US government support is focused on the domestic clean energy industry, " the letter said.

The senators single out a particular wind project in Texas for criticism. China's Shenyang Power Group, a Texas company called Cielo Wind Power and the US Renewable Energy Group have engaged in a joint venture to build a 648MW wind farm in the Lone Star State, which the group says is on the verge of receiving $450m in grants, even though it uses Chinese-made turbines, and creates the lion's share of jobs in China. Republican senator for Texas John Cornyn appears to have been largely silent on Shenyang's involvement in the deal.

The letter, signed by an all-Democrat group, will be embarrassing to the Obama administration, which worked hard to push the stimulus bill past the Republican party in February last year. According to the White House, 38 per cent of the total stimulus funding has already been paid out.

It will also threaten to reignite the debate surrounding growing levels of protectionism in the clean tech sector, and if adopted, could spark a trade war with a Chinese government that has fiercely opposed any trade barriers that affect the country's exporters.

In related news, the Department of Energy awarded another $100m in grants under its ARPA-E programme this week. The funding represents the third round in the $400m initiative, which aims to accelerate innovative projects that could transform energy policy in the US. Grid-scale energy storage, electrical power technology, and building energy efficiency projects all received money from the latest round of grants.