Despite Evergreen Closure, State’s Tech Strategy is Sound

January 13, 2011 : The Boston Globe, Editorial

The state’s investment in Evergreen Solar Inc. was worth the risk, but that doesn’t make it feel any better to watch it fail. The solar panel maker spent at least $340 million setting up a plant at Devens, employed close to 800 people there, but got caught in a major downturn in the price of solar panels. Facing that pinch, it decided to shift its manufacturing to its existing plant in China.

It's a blow to Massachusetts’ efforts to become an international leader in renewable energy — but not a reason to stop trying, just to keep learning. State Senator James Eldridge’s request that the state “take a look at these tax-break strategies for big corporations” is reasonable. Evergreen will be the first major test of the state’s “clawback” rules for corporate aid, and if Massachusetts is unable to recoup a significant part of its investment, those rules must be tightened. Evergreen’s failure gives the Patrick administration more reasons to be especially thorough in reviewing companies seeking tax breaks and economic development funds.

In most industries, there is no need for such benefits. Granting them would merely set off a free-for-all among Massachusetts employers; pretty soon, every company will expect them. But energy is different. It’s a key public resource. Admittedly, there’s only a tenuous relationship between the state’s need for inexpensive, renewable power — a vital economic interest — and its desire to be the home of the clean energy industry. But in furthering the development of clean energy, it serves its own needs as well.

And there is a unique opportunity in the burgeoning clean energy industry. Whichever state — or nation — becomes the center of the industry will reap potentially hundreds of thousands of jobs and billions of dollars of economic return. In solar energy, China has jumped out in front not just because costs are lower, but also by offering a wide variety of subsidies.

The US government should work with the World Trade Organization to ensure that China follows international trade rules, and the Obama administration should keep pressing China to stop undervaluing its currency, a practice that helps Chinese exporters undercut their competitors. Regardless, the federal government should look for new ways to win back plants like Evergreen’s, and to support the clean energy research and design work that has a natural home in the United States.

As for Massachusetts, the loss of funds invested in Evergreen is clearly unfortunate. Of the total of $58 million, the state will retain about $13 million in infrastructure, all of the future rental subsidies and unspent tax credits, plus whatever Evergreen returns under the “clawback” rules. Nonetheless, at least half the money will be lost. Measured against some of ancillary benefits — the construction jobs in building the plant, the privately financed infrastructure that Evergreen leaves behind — the losses are somewhat more tolerable.

It's a setback, for sure — but not a reason for Governor Patrick and the Legislature to turn away from their commitment to make Massachusetts a leader in the clean tech industry.