A fit of right-wing pique over a tax deal last week has left one the most successful policy tools for boosting wind energy in limbo.
The production tax credit (PTC) for wind is a subsidy aimed at encouraging the growth of wind power by providing a per-kilowatt-hour tax cut for all qualifying energy sources. It was originally established in 1992, and then bulked up by the stimulus bill in 2009. It was originally set to expire at the end of 2012, but Congress extended it at the last minute until the end of 2013, when it expired again. Since then, congressional gridlock has prevented another extension.
Until last week, that is, when a bill looking to retroactively renew over 50 tax breaks through the end of 2014 — including the wind PTC — appeared set to pass the House and Senate. But according to Politico, congressional Republicans were so angered by President Obama’s recent executive order granting reprieve to 4.9 million undocumented immigrants that they cut the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) out of the deal.
While most of the tax credits that would’ve been extended by the deal go to the benefit of businesses and major industries, the EITC and the CTC help the poorest Americans by boosting their take-home pay. Their loss has sent the ostensibly bipartisan agreement on the tax break extension bill into a spiraling collapse, leaving the fate of the wind PTC in limbo.
Obama has threatened to veto the bill if the EITC and the CTC are not restored, and according to E&E News, Finance Committee Chairman Ron Wyden (D-OR) has said “he is ready to fight the package because it is unfair to the working class.” Furthermore, supporters of the wind PTC like the Sierra Club are voicing opposition to the current deal on the grounds that simply extending the tax credit through the end of 2014 is insufficient, and that the extension should run through the end of 2015. Sen. Ed Markey (D-MA) and Sen. Tom Udall (D-NM) are apparently on a similar page, and will be holding an event on Thursday to highlight the importance of the wind PTC.
“Wind has huge promise — not only is it carbon free, it’s abundant in New Mexico, and it uses almost no water,” Udall’s office told ThinkProgress. “Now is the time for Congress to make a commitment to fight climate change and help create jobs of the future by extending the wind production tax credit so this important industry can meet its full potential.”
The history of expirations and last minute extensions has created a “boom and bust cycle” for wind energy in America, as installations and new projects ramped up through 2009, then collapsed, then ramped up only to collapse again in 2013.
CREDIT: Union of Concerned Scientists, based on data from DOE 2013 and AWEA 2014
According to many of the PTC’s backers, the plan to extend the credit just through the end of 2014 would do nothing to alleviate this cycle, as it would give only a few weeks for new projects to qualify. “Short-term extensions of the PTC are insufficient for sustaining the long-term growth of renewable energy,” the Union of Concerned Scientists (UCS) has explained in a blog post. “The planning and permitting process for new wind facilities can take up to two years or longer to complete.”
Last week, the American Wind Energy Association (AWEA) — the primary lobbying group for the wind industry — broke out a poll it had commissioned which found that 73 percent of registered voters would support “keeping the Production Tax Credit in place so that investment in wind energy can continue.” That response included 63 percent of registered Republicans. AWEA’s poll also got a 79 percent agreement with the statement that “incentives for investment in wind energy help American workers make more of our own energy here in America.”
Based off previous collapses in installation growth when the PTC was allowed to expire, the AWEA estimates that 30,000 jobs in the wind energy sector will be lost if Congress sticks with the current legislation to extend only through 2014.
Meanwhile, according to data from the Department of Energy, the portion of small wind turbines installed in the United States that were also manufactured here grew from 71 percent in 2012 to 88 percent in 2013. Back in 2006, only 25 percent of the components for the wind turbines installed in the U.S. were also manufactured here. That said, U.S. turbine manufacturers don’t just sell here, and from 2012 to 2013 the percent of American-manufactured turbines that were also sold here fell from 76 percent to 57 percent — arguably thanks in no small part to the boom-and-bust of the wind production tax credit.