Federal funds helping towns once dependent on fossil fuels switch to clean energy

New federal programs are helping communities that were previously reliant on coal, oil or gas in transitioning towards sustainable and clean energy alternatives. 

Vernon, Texas, near the Texas/Oklahoma border, was once home to the 650-MW coal-fired Oklaunion Power Plant that employed about eighty people– but it also released air pollution linked to 160 deaths (CI 150-180) between 1999 and its decommission in 2020 due to “unfavorable market conditions.” City leaders and school district officials in Vernon raised concerns about the loss of jobs and tax revenue from the plant itself, which was the biggest taxing entity within the district. 

Now, a program from the Department of Energy designed to help small- and medium-sized manufacturers bring clean-energy jobs to former coal communities will provide $20 million to Carter Wind Turbines, LLC, which is based in Vernon. Carter Wind Turbines, a family owned company, specializes in scaling the production of hybrid wind turbines and energy storage systems, with the aim of enhancing access to wind energy in remote, rural areas, and challenging terrains.

Matt Carter, President and CEO of Carter Wind Energy, expressed that the federal funds are not only an investment in Carter Wind, but also an investment in the local community. Carter is building a new facility to produce innovative, onshore, mid-sized 300 kW wind turbines. The company has said it will create 300 new high-quality manufacturing jobs, unlocking additional funding from the private sector and engaging extensively with the community to negotiate agreements and invest in workforce development and diversity. 

The grant to Carter Wind comes from the Advanced Energy Manufacturing and Recycling Grant Program, a bipartisan infrastructure law program designed to “provide grants to small- and medium-sized manufacturers to enable them to build new or retrofit existing manufacturing and industrial facilities to produce or recycle advanced energy products in communities where coal mines or coal power plants have closed.”

The $1 trillion Inflation Reduction Act (IRA), the most significant investment in clean energy in the nation’s history, also provides incentives for clean energy in towns previously dependent on fossil fuels. 

The Energy Community Tax Credit Bonus applies special tax credits for projects, facilities, and technologies located in energy communities, which are places that had a coal plant closure since 1999 or a coal-fired electric generating unit closure after 2009; or they have both significant employment related to fossil fuel extraction and a high unemployment rate; or have a brownfield site. 

New wind and solar projects are eligible for 30% tax credit. If they build in an energy community, they can now get an additional 10% tax credit, reducing the cost for the project by a combined 40%. Given that almost all of Texas qualifies, most new utility-scale wind and solar projects built in the state will likely qualify.

You can also get another 10% tax credit through the domestic content tax credit for steel, iron or manufactured products that are manufactured or produced in the United States (four solar farms in Texas are the first to take advantage of it).

Finally, the Qualifying Advanced Energy Project Credit program  offers an investment tax credit of up to 30% for projects not covered by tax credits for things like wind and solar energy. $4 billion of this program will go toward communities with closed coal mines or retired coal-fired power plants to support “manufacturers of renewable energy property, fuel cells, grid modernization equipment, carbon capture equipment, energy conservation technology, hybrid and electric vehicles and infrastructure, and equipment to produce, refine or blend any low-carbon or renewable fuel.” The credit can also be used re-equip coal plants to reduce carbon emissions by 20% and for equipment to process critical minerals.

These new initiatives address the challenge of diminishing the nation’s reliance on fossil fuels like coal and oil, and simultaneously facilitates the prospect for former coal mining communities to establish jobs in the field of green energy.