Obama’s Clean Energy Tax Credit Appears to be MIA as Carrier Corp. Moves 2,100 Jobs to Mexico

By Chanil N. De Silva, Policy Director at Nouveau

A recent video of 1,400 American workers learning that their jobs were being relocated to Mexico sparked outrage last week. This incident adds fuel to the already heated debate on protecting American jobs and capital from being sent abroad.

Carrier Corporation is the company at the center of this most recent controversy. A brand of United Technologies Corporation, the company announced this week that its Indianapolis plant would “undergo a three-year transition to Mexico starting in 2017,” resulting in the loss of 1,400 American jobs. On the same day, the company also announced that its Huntington, Indiana plant would be moved, affecting another 700 jobs. The company’s President addressed the workers saying the move was “strictly a business decision.”

The Issue

In 2013, the Department of Energy (DOE) awarded Carrier $5.1 million in clean energy tax credits as part of President Obama’s 2009 stimulus package known as the American Recovery and Reinvestment Act. The stimulus package created the $2.3 billion Advanced Manufacturing Tax Credit, popularly known as the 48C Program. This program provides a 30 percent tax credit to organizations investing in green manufacturing plants here in the U.S. The announcement by Carrier Corp. therefore received heavy criticism, especially given that it was the recipient of such a large award. According to U.S. Energy Secretary Ernest Moniz, this type of tax credit was intended to encourage businesses to “create and maintain green jobs here at home, and not overseas.”

In response to the harsh criticisms it received, Carrier’s spokesperson issued a statement on Monday stating that although awarded, it never received the $5.1 million tax credit it was due and doesn’t hope to claim it either. At the time the award was announced, the DOE claimed the money would allow Carrier to “expand production at its Indianapolis facility to meet increasing demand for its eco-friendly condensing gas furnace product line.”

The case of the missing tax-credit deserves the immediate attention of lawmakers and the program should be investigated promptly. If indeed Carrier has not received the $5.1 million credit it was granted over two years ago, this raises serious concerns as to the transparency and efficiency of the 48C Program. Officials should be held accountable as to how this award was delayed and what happened to the credit allocation in question. If other awards have not been received, then do these bureaucratic delays undermine the intention of the whole program?

On the other hand, if the company received the tax credit, then does the program require the repayment of the tax credit? If so, the money needs to be returned to the federal government, and if not, then officials should strongly consider revising the conditions under which these credits are given.

Either way, this fiasco further casts doubt on policies designed to persuade companies to go green using monetary incentives without taking practical matters such as costs into consideration. This incident should not be swept under the rug, but used as an example of what can go wrong with well-intentioned programs designed to prevent American jobs from being shipped overseas.

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