Climate

What Would Happen If Wind Power Got The Same Tax Breaks As The Fossil Fuel Industry

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America: land of wind power, maybe.

After two years of research, the Department of Energy released a report on Thursday estimating how much energy the U.S. could get from wind in the next 35 years. The results were extremely optimistic: under an “ambitious but credible” scenario, America could get 10 percent of its power from wind by 2020; 20 percent by 2030; and 35 percent by 2050, the report said.

In order for this to happen, though, the report acknowledged that “new tools, priorities, and emphases” need to be set in place beyond the wind industry’s own efforts. Tom Kiernan, CEO of the American Wind Energy Association (AWEA), told ThinkProgress that one of the most important priorities is giving tax benefits to the wind industry.

“A key determinant is having a stable federal tax policy, which as you may know, every form of other energy source has — at least every other fossil fuel-based source of electric generation,” he said. “They have tax benefits, tax support, that are permanent in the tax code. For wind, major tax support is not permanent.”

Kiernan isn’t wrong. Oil and gas companies receive a number of permanent tax incentives, totaling $18.5 billion in 2013, according to a report from the environmental group Oil Change International. Taxpayers also permanently subsidize some costs of the coal industry. The historical reasoning for these tax breaks, according to the Houston Chronicle, has been “to attract investment into an industry deemed high risk, and to promote employment.”

The wind industry, by contrast, has had a rough go of getting permanent tax incentives. Even before Republicans were in control of both chambers, Congress has repeatedly refused to revive the Wind Production Tax Credit (PTC), a $13 billion yearly tax break to the wind industry that has historically helped it compete with fossil fuels. The wind PTC is a subsidy that’s been built into the tax code since 1992 to encourage growth in the industry.

At one point, the PTC had a pretty good run. After it was reinvigorated by the 2009 stimulus, wind energy started booming. According to the AWEA, U.S. wind energy capacity saw a 140 percent growth rate from 25,000 megawatts (MW) to more than 61,000 MW since 2009. And that’s just capacity — the actual electricity generated from those turbines grew at a rate of 200 percent. In 2013, wind power accounted for 4 percent of all electricity generated in the U.S.

But that tax credit was set to expire in 2012, and since then, Congress has been caught in gridlock over whether to renew it. It eventually expired at the end of 2013, and — coincidentally or not — wind has not been growing as fast.

As it looks now, it’s unlikely that a Republican-controlled Congress will renew the PTC. Generally, Republicans oppose giving tax breaks to the wind industry on the grounds that they amount to a form a “welfare” that unfairly props up an industry present in some states but not others.

What’s more, the PTC has already been rejected by the current Senate. While debating a bill to approve construction of the Keystone XL pipeline last month, Sen. Heidi Heitkamp (D–ND) attached an amendment for a five-year renewal of the PTC. The amendment, which needed 60 votes to pass, failed 51-47.

Fortunately for the wind industry, the PTC is not the ultimate deciding factor on whether growth succeeds or fails. As Kiernan noted, wind production can be helped by building more infrastructure — roughly 900 miles of transmission lines each year from now until 2050 to meet the goals in the Department of Energy’s report.

Projects to achieve this are underway. In Oklahoma, a proposal for a $2 billion transmission line “would transform the state into a national wind energy hub,” according to NPR. But that proposal faces obstacles, too — particularly from landowners who don’t want to see transmission lines on their properties.

Still, Kiernan is optimistic. Just a few days ago, he noted, a company called Deepwater Wind received formal notice to proceed on what could be the country’s first offshore wind farm. And wind is growing a lot faster than fossil fuels — as noted by Chris Mooney in the Washington Post, wind increased net generation by 13,951 megawatt hours from 2013 to 2014. That’s a bigger increase than for any other electricity source, Mooney noted.

“The fact that industry is still growing and is still driving costs out of the system shows, in my mind, what the potential is for the industry,” Kiernan said. “But we could do a whole lot more.”