Lobbying For Wind Energy Tax Credit Intensifies As Expiration Nears

September 19, 2012 by  
Filed under Green Energy News

Supporters of wind energy are predicting that what happens in Congress over the next several days could be crucial to the fate of the industry, warning that more than 37,000 jobs could be in jeopardy if lawmakers fail to extend a vital tax credit for renewable power producers.

Advocates have called on the Senate to pass a proposed extension to the Renewable Energy Production Tax Credit (PTC) before it expires at the end of the year, which allows for a corporate tax credit of up to 2.2 cents per kilowatt-hour of electricity produced from energy resources such as wind, solar and hydropower.

Perhaps it should come as no surprise that the question over whether to extend the credit has turned into a political debate over the economic viability of wind power, and to a greater extent, the overall capability of alternative energy to meet the county’s future demands for electricity.

Earlier this month, a coalition of 64 organizations led by conservative political group, Americans for Prosperity, sent a letter to Congress urging lawmakers to end PTC, which was first implemented in 1992, arguing that it has failed to fulfill its promise of providing a cleaner, more cost-effective alternative to fossil fuels.

If a new technology truly has worthwhile benefits for American consumers such as lower cost, higher efficiency, or environmental benefits, then that technology will demonstrate its value by competing in the open market for consumers’ dollars—not by living off of special provisions in the tax code … American consumers—not Washington lawmakers— should decide the future of American energy. 

Today, a coalition of 19 major companies countered that argument with their own letter to Congress calling for an extension of PTC.

As major U.S. employers and some of the largest non-utility
purchasers of renewable energy, we urge you to extend the Production Tax
Credit (PTC) for wind energy before the end of the 112th Congress.  A
failure to pass an extension will amount to levying a tax on companies
committed to buying American energy and growing the U.S. economy.  In
today’s economic climate, a tax hike on American businesses buying
American renewable energy is unwarranted.

In the past decade
American businesses have significantly ramped up their purchase of
American wind energy. For consumers of wind electricity, the economic
benefits of the PTC are
tremendous.  Electricity rates, which
reflect marginal costs for power plant operations and fuel prices,
consistently decrease when wind enters the market.  Because wind prices
can be locked in up front, businesses incorporating wind into their
energy portfolios are better equipped to hedge market volatility in
traditional fuels markets caused by supply shocks. 

The letter went on to point out PTC’s successes, namely that the credit has helped the costs of wind energy plummet by 90 percent since 1980, while also adding jobs to the economy.

“In the seven years that the PTC has been continuously in place,
installed wind capacity has grown sevenfold to nearly 47 Gigawatts
representing more than $79 billion in private investment,” the letter signed by several companies and organizations including Starbucks, Sprint, The North Face, Levi Stauss Co., Yahoo, the Portland Trail Blazers, and Jones Lang Lasalle notes. “As Congress
investigates ways to spur business growth, we urge you to ensure an
extension of the PTC. Failure to extend the PTC for wind would tax our
companies and thousands of others like us that purchase significant
amounts of renewable energy and hurt our bottom lines at a time when the
economy is struggling to recover. Extending the PTC lowers prices for
all consumers, keeps America competitive in a global marketplace and
creates homegrown American jobs.”

Over the last year, several governmental groups and political leaders have also sent letters to Congress calling for an extension of the credit including county commissioners, the National Governor’s Association and even Republican legislators. 

As reported in the Chicago Tribune, the fight over PTC recently led the country’s largest wind energy trade association, the American Wind Energy Association (AWEA), to expel Chicago utility ComEd’s parent company, Exelon Corp., from its membership over the power supplier’s lobbying effort to block an extension.

Meanwhile, Republican presidential nominee Mitt Romney says he would be in favor of allowing the tax credit to expire. 

“There’s a misconception I think among some that the wind industry really doesn’t exist,” said Bob Keefe, spokesman for the Natural Resources Defense Council. “Every time a major wind farm is built nearly 1,100 jobs are created all the way down the supply line.” 

While electricity produced from wind energy currently makes up less than 4 percent of the nation’s demand, proponents have argued that technological improvements along with government incentives have helped the industry grow significantly in recent years.

According to the U.S. Department of Energy, wind power made up 32 percent of all new power added to electric capacity, second only to natural gas, representing $14 billion in new investment. The agency has projected wind energy could produce as much as 20 percent of the nation’s electricity by 2030. 

Keefe said the need to address continued doubts concerning wind power’s fiscal viability was what prompted the release of two new NRDC reports that showed the positive economic impact the industry has had on communities, as well as the potential losses that could occur if incentives such as the tax credit were to end.

Featured in the NRDC report, “At Wind Speed”, was the central Illinois county of Livingston, which has received $3.5 million in annual property taxes, $1.2 million in yearly payments to land owners and more than 400 construction jobs since the installation of its Streator Cayuga Ridge South Wind Farm in 2010.

According to AWEA, the wind energy industry currently employs an estimated 75,000 people across 38 states. In Illinois, the industry was responsible for supporting an estimated 7,000 jobs in 2011 and generating nearly $19 million in property taxes by wind farm owners. 

Critics have argued it remains more expensive to produce electricity by wind than by more traditional fuel sources such as oil and gas, believing the industry would be priced out of the open market if not for the assistance it receives from government incentives. Meanwhile, the oil and gas industries continue to receive billions in long-time tax subsidies.

Wind energy proponents contend, however, that most of the costs – about 80 percent – of a new project comes from its initial startup, and that it becomes less expensive to operate a facility over time compared to the expense involved in extracting fossil fuels.

Supporters are concerned expiration of the tax credit while in the middle of an economic recovery could serve to slow the growth of an industry that has been second in the world only to China over the past few years in terms of the number of new wind turbines that have been built. According to AWEA, at times in the past when PTC was allowed to expire, job losses within the industry have usually followed at rates as high as 90 percent.

It is not known at this point whether the Senate will take up the matter, but it is generally understood that the best chance of a vote occurring prior to November’s election lies within the Democratically-controlled body as opposed to the Republican-led House of Representatives. Last month, the Senate Finance Committee passed a bill that included an extension of PTC.

Keefe said passage of a bill by the Senate would be enough to help alleviate some of the uncertainty within the industry, which he said has already resulted in layoffs at least 10 companies so far this year.

“Every day that goes by we hear about more layoffs in the wind industry because of the uncertainty in the marketplace because of Congress’ failure to extend the PTC so far,” Keefe said. “Congress is in session for several more days before it goes on break for the election – there’s not a whole lot of time left to get this done.”

Aricka Flowers contributed to this story.

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