Volume 88 Issue 3 | p. 8 | News of The Week
Issue Date: January 18, 2010

Clean Energy

Windfall: Chemical firms win recovery-act tax credits for new plants
Department: Business, Government & Policy | Collection: Climate Change
News Channels: Environmental SCENE
Keywords: Clean energy, Recovery Act, tax credits, polysilicon, domestic manufacturing, whitehouse

A number of chemical and materials companies received some happy news from the Internal Revenue Service. As part of a $2.3 billion tax credit program under the American Recovery & Reinvestment Act of 2009, they have been awarded tax breaks designed to spur manufacturing in the clean-energy sector.

Hemlock Semiconductor—a joint venture of Dow Corning, Shin-Etsu Handotai, and Mitsubishi Material—will get the largest credit: $141.9 million to expand a polysilicon plant in Hemlock, Mich. In second place with a $128.5 million credit is the North American branch of Wacker Chemie, Hemlock’s German rival, for a polysilicon plant in Charleston, Tenn. Both plants will supply raw material for traditional photovoltaic solar cells.

DuPont, Dow Corning, PPG Industries, and Dow Chemical will receive tax credits for materials, including films and coatings, used in the manufacture of solar cells. Dow will also get a $17.8 million credit for producing solar building products, including its Powerhouse Solar Shingles, to be manufactured in Midland, Mich.

Not all the credits target solar. Biocatalysts maker Novozymes will get a $28.4 million credit to produce enzymes for cellulosic ethanol at a facility in Blair, Neb. Carbon fiber and composites firm Hexcel will enjoy an $8.1 million boost for its wind blade materials facility in Windsor, Colo. Transportation and building equipment firms are also receiving credits.

In announcing the credits, President Barack Obama highlighted December’s weak jobs report, saying, “Building a robust clean-energy sector is how we will create the jobs of the future—jobs that pay well and can’t be outsourced.” He also identified energy security, combating climate change, and competition from China as driving the need for tax credits.

But the tax credits may not create permanent employment, warns Robert Nolan, principal at NanoMarkets, a technology analysis firm. “They’re taking tax money and funneling it to businesses that don’t necessarily use capital in an efficient manner. What happens when the money runs out?” he asks. He also sees a risk that the incentives could stimulate overcapacity in some industries. Market watchers say this is already a threat for polysilicon (C&EN, Nov. 9, 2009, page 28).

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