In an effort to address a state budget shortfall, Oklahoma Gov. Mary Fallin (R), a longtime advocate for the fossil fuel industry, signed a bill into law Monday that will end the wind energy industry’s tax credit by July 1.
For years, renewable energy industries — wind, solar, geothermal, and others — have demanded tax credits as a way to “level the playing field” with entrenched fossil fuel industries. Renewable energy advocates are quick to note that coal, oil, and gas companies have been receiving tax breaks and other government subsidies for over a century.
The wind production tax credit went into effect in 2010. According to Tulsa World, since then, the wind industry in Oklahoma has grown from $3.7 million to $113 million in 2014.
“The zero emissions tax credit was key to the growth of wind energy in Oklahoma, and I’m grateful to the industry for their ambitious successes, as well as their willingness to work with the state to address our challenging budgetary circumstances,” Fallin said at the signing.
The tax credit was set to expire in 2021. Wind energy executives said the industry was prepared to give up the tax credit, although they had initially requested that the phase out date not been quite so quick, NewsOK reported.
In fact, phasing out the credit ahead of time goes against the idea that businesses want certainty. A project proposed for next year, for instance, will now have to recalculate its rate of return.
Senate Pro Tem Mike Schulz (R), who sponsored the bill, put it differently.
“Accelerating the end date of the wind-energy tax credit provides certainty for the industry and more predictability and stability long term in the state budget,” he said.
“This bill will save the state a significant amount of money moving forward, freeing up revenue that can be used on high priorities like education, public safety and health care,” he said.
Oklahoma is in the midst of a deep budget crisis, with the potential for school closings and cutbacks at many state agencies. An investigation by Reuters last year found that the state has continued to offer significant tax breaks to the oil industry, despite the budgetary shortfall. Low tax rates on oil and gas production cost the state $470 million in 2015 alone, Reuters reported.
In contrast, the early sunset on the wind tax credit is expected to save the state $500 million over the next 10 years.
The budget shortfall has been tied to low oil prices. About a quarter of Oklahoma’s jobs are tied to the oil and gas industries.
As with many Oklahoma politicians, Fallin has been supportive of and supported by oil and gas industry. In 2014, she signed a bill to make a tax incentive for new oil and gas drilling permanent, and her biggest campaign contributors have been oil and gas companies, according to OpenSecrets.org.