A tale of two subsidies

When it comes to subsidies, it’s the best of times for Royal Dutch Shell but the worst of times for Pennsylvania’s solar companies.

Governor Corbett wants the General Assembly to quickly pass a massive subsidy for one company – Royal Dutch Shell – to ensure that Shell locates an ethane cracker plant in Beaver County, Pennsylvania instead of Ohio or West Virginia. Already two Beaver County Republicans, Rep. Jim Christiana and Senator Elder Vogel, have put forward legislation to give Shell a $66 million a year tax break on each gallon of ethylene it makes out of ethane, a by-product of natural gas. Saying that there’s an urgent need to ensure Pennsylvania wins the bidding war with Ohio and West Virginia for the cracker plant, the governor wants this tax break passed with the budget by the end of June.

Last fall, Rep. Chris Ross of Chester County introduced a bill HB 1580 that would help Pennsylvania’s solar industry over a rough spot. A burst in installations of solar power systems spurred by federal tax credits and the successful Pennsylvania Sunshine Program created more solar generated electricity than is needed for Pennsylvania utilities to meet the solar standard set in the Alternative Energy Portfolio Standards Act (AEPS). As a result, the price of the credit solar generators receive crashed making it difficult to finance new solar systems and large solar projects. Rep. Ross’ modest bill would slightly increase the solar energy standard for three years to bring supply in balance with demand. The bill would cause a temporary slight increase consumer electricity bills by about 4 cents a month.  The bill has more than 100 co-sponsors from both parties. 

The solar industry in Pennsylvania is comprised of more 750 businesses employing more than 4,000 workers. These are good jobs already created. They are here now, but the low solar credit price threatens to put some companies out of business or send them to other states. Despite the jobs at risk and the negligible cost, the Corbett administration opposes the Ross bill.   

Incredibly, the Pennsylvania Chamber of Business and Industry also opposes this bill which would protect 750 businesses. The Chamber says it like solar energy, “But taxpayers should not be expected to foot the bill for a specific energy sector that must be able to compete and thrive on its own.” However, the Chamber sings a different tune when it comes to the tax break for the ethane cracker. Gene Barr, the Chamber president said that he understands why the governor offers incentives. 

The governor says Pennsylvania needs to offer the tax break to Shell to attract the 20,000 jobs the cracker plant will create. However, the Pennsylvania Budget and Policy Center points out that a bill passed in March exempting Shell’s cracker plant from corporate income and property taxes for 15 years requires Shell to create only 400 permanent jobs – a number consistent with employment at similar plants elsewhere.  

The governor’s economic tunnel vision sees only natural gas driving growth and prosperity in Pennsylvania. And that narrow vision has him putting 4,000 existing jobs at 750 Pennsylvania businesses at risk while chasing 400 permanent jobs at one company with lavish tax breaks.