Wind back in the sails for wind energy tax credit

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The Governors' Wind Energy Coalition, a bipartisan group of 23 state governors dedicated to enhancing the development of wind energy in the U.S., has called on Congress to adopt the Wind Energy Production Tax Credit, scheduled to expire at the end of this year. Some of the same political forces that have sought to undermine support for climate science and acting on climate change are part of the campaign to do away with the wind energy credit. “Without a PTC extension," the governors' letter says, "it is estimated that the U.S. economy will lose 37,000 wind industry jobs and the opportunity to leverage over $10 billion of private investment."

Congress can be characterized in one word -- gridlock. In a 60 minutes interview, Senate Majority leader Harry Reid said the word compromise is now synonymous with weakness.  “We’ve run into a situation here where compromise is not part of what we do around here anymore,” stated Reid.

The rest of America knows that Congress is broken, too.  As climate records are being set in the United States, so to are those for approval rating.  Congress saw its lowest approval rating since polling on this began more than 38 years ago.  According to Gallup poll data cited at Huffington Post, “just one in 10 Americans approves of the job Congress is doing.”  But some, away from the partisan gridlock of Washington, are working together to bring about improvements at the state level.

The collaboration between Governors Terry Branstad (R-Iowa) and John Kitzhaber (D-Oregon) on promoting wind energy development is no coincidence.  They are among the 23 members of the Governors’ Wind Energy Coalition, “a bipartisan group of the nation’s governors who are dedicated to the development of the nation’s wind energy resources to meet America’s domestic energy demands in an environmentally responsible manner — while reducing the nation’s dependence on imported energy sources and stimulating state and national economic development.”  Both governors, speaking on behalf of the coalition, have sent a letter to Congress urging leadership to adopt the Wind Energy Production Tax Credit, scheduled to expire at the end of this year.

The Production Tax Credit (PTC) has been the “major driver of wind energy development over the last 7 years.  It provides a 2.2 cent per kilowatt-hour tax credit for the first ten years of electricity production from utility-scale turbines,” according to the Union of Concerned Scientists.  The wind industry has experienced feast or famine that goes hand-and-hand with expiration of the PTC.  When the tax credit is in place, the industry experiences steady growth, while impending expirations of the PTC wreak havoc on the industry’s planning and implementation of new installations.  Here is a graph showing this disturbing trend.

 

The Coalition letter says many Americans' jobs are at stake.  “Without a PTC extension, it is estimated that the U.S. economy will lose 37,000 wind industry jobs and the opportunity to leverage over $10 billion of private investment.”  Layoffs due to the impending expiration in wind energy heavy states like Colorado and Texas are already occurring.  Support for wind energy also may have proved decisive in swing states like Iowa during the Presidential election.

The component-manufacturing sector for wind energy may have been hit the hardest by the gridlock of Congress.  Employing roughly 75,000 Americans and generating $20 billion annually for 5 consecutive years, this industry is facing massive setbacks.

“Wind turbine manufacturer Vestas laid off 182 of its employees, and has stated that 1,600 of its employees— most of whom are Colorado-based— are at risk.  Clipper Wind Power has laid off a 100 workers.  Siemens laid off 407 workers at its blade manufacturing facility in Fort Madison, Iowa,” according to the letter.  The entire wind industry is effectively holding its breath while it waits for the renewal of the PTC.

Next comes the question, why doesn't the PTC have enough consistent political support in Congress?  If so many jobs and revenue are at stake in many midwestern states, why aren’t more representatives openly supporting the tax credit?

According to Andrew Restuccia of Politico, a two-pronged assault on wind energy has been occurring over the last few months.  The main goal of right-wing 'free enterprise' groups like the Heritage Foundation and American Energy Alliance is to make wind energy a political leper, much like the topic of climate change currently is in Congress.  “First, tie the tax credit to failed renewable energy companies like Solyndra that House Republicans have railed against for more than a year.  Second, argue that the country can’t afford to maintain the tax credit at a time of economic uncertainty,” states Restuccia after speaking with opponents of the PTC.

Sound familiar?  Groups like this have been waging a war for years on climate science and the consensus on anthropogenic climate change, manufacturing doubts about the science that is communicated by the most credible experts and attacking scientists who speak out on climate change.

As a few vocal opponents of the PTC criticize the initiative, the political support for the PTC is mounting.  In many political races, opposing the PTC has proven costly for lawmakers in states that rely on wind industry for much of their revenue and employment.  Those representatives who were “wind champions” more often than not came out on top of close political races.

“Out of all the Senate candidates for this election cycle who were supported by WindPAC,” the political action committee that supports candidates in favor of wind energy, ”89 percent won their races.  Of all the House candidates supported by WindPAC, 88 percent won as well,” according to Ellen Carey at the American Wind Energy Association.

The political landscape is changing.  Conservatives from windy states like Iowa and Texas must now support the PTC if they wish to keep their seat.  This new inspiring trend has me very optimistic that the tax credit will be passed in this “lame duck” Congress before it expires.  Although extending the PTC for another year would help the wind industry rebound, more is still needed from our policymakers.

Extending the PTC for a year would just be delaying the inevitable return back to these current circumstances a year from now.  The wind industry would resume its rapid growth, only to slow down as the impending expiration of the PTC looms closer and closer.  Congress and the wind industry cannot afford to kick the can down the road.  What is needed from Congress is multiyear extensions of say 4 years so the industry can perfect turbine technology and become cost-competitive with traditional fossil fuels.

A clear public understanding of the inequality of federal subsidies to favor the fossil fuel industry is typically lost in this debate.  Fossil fuel companies and the ‘free enterprise’ groups funded by the energy industry are crying out that the federal government is picking “winners and losers” in the energy sector.  What the fossil fuel industry fails to mention, while lining their pockets with government cash, is that they are receiving the lion’s share of direct spending and tax incentives.  While the fossil fuel companies feast like gluttons on federal subsidies, the wind energy is getting scraps from the metaphorical big boys table.

With the expiration of the PTC on the horizon, wind industry supporters like the Governors’ Wind Energy Coalition are rallying to back the tax credit.  Without the PTC the wind industry will be essentially flapping in the wind.  “The United States has some of the best wind resources in the world, but the lack of policy stability hinders the nation’s ability to develop them fully.”

Earlier posts:

End Polluter Welfare Act would eliminate more than $110 billion in subsidies to the fossil fuel industry

Rally at US Capitol to end fossil fuel subsidies

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