Wind Tax Credits: Obama vs. Romney
Debate over the looming expiration of the US wind production tax credit gusted through Washington, D.C., this week with Senate Democrats calling for a one-year extension of the incentive.
The legislation unveiled by the Senate Finance Committee as part of a broader tax extension package has a long way to go before it becomes official. Still, the idea received bipartisan support, with a 19-5 vote in favor of the measure.
The proposed new credits would cost an estimated $3.3 billion, and they would cover projects that begin before the end of 2013. The entire bill will be considered by the Senate after Congress returns from its summer recess.
In the House, Representative Bob Filner (D-CA) has proposed a bill (called the “Clean Energy Victory Bonds Act of 2012,” officially H.R. 6275) that would extend the wind production tax credit (PTC) and other clean energy incentives for a decade by raising the money through bonds. The bill would leverage $50 billion in investments to create about $150 billion in public and private financing.
The wind incentives became a defining issue in the US presidential election when a spokesperson for the presumptive Presidential candidate Mitt Romney indicated he would allow the credits to expire, as scheduled, at the end of 2012.
The Romney campaign made an even more definitive statement about the issue in comments made through another spokesperson to the Des Moines Register:
“He will allow the wind credit to expire, end the stimulus boondoggles, and create a level playing field on which all sources of energy can compete on their merits,” Iowa campaign spokesman Shawn McCoy said in a statement to the paper. “Wind energy will thrive wherever it is economically competitive, and wherever private sector competitors with far more experience than the president believe the investment will produce results.”
The Obama Administration is calling for a permanent extension of the PTC and has been leaning on Congress for many months to renew it.
When the PTC last expired, back in 2004, wind installations fell off sharply. Numerous projects and even factories have already been cancelled because they don’t make financial sense without the incentive.
Thousands of American jobs are also at stake in key wind states such as Iowa and Illinois, so Romney’s anti-incentive position could spell trouble for Republicans during the upcoming US election.
A recent poll by the American Wind Energy Association (AWEA) found that Iowa voters are less likely to vote for candidates that do not support expansion of wind generation projects. Iowa gets 20% of its power from wind and has more major wind manufacturing facilities than any other state (200 companies across 50 counties); as many as 7,000 people are employed in the wind industry. If the PTC expires at the end of 2012, up to 3,000 jobs will be at risk immediately, says the AWEA.
Commenting on Romney’s position, Representative Congressman Tom Latham (R-IA) made the following statement:
“I’m disappointed that the statement by Governor Romney’s spokesperson shows a lack of full understanding of how important the wind energy tax credit is for Iowa and our nation. It’s the wrong decision. … A continuation of the wind energy tax credit is in the best interest of our nation’s all-of-the-above energy policy for American energy independence and for our economy.”
In Illinois, wind projects will add $5.8 billion to the state’s economy over their lifetime, according to study released in July by the Center for Renewable Energy at Illinois State University.
Illinois projects that are currently on the drawing board would add 12,700 jobs and millions more to local economies in the form of payments to landowners and property taxes, the study finds. But many of those projects are on hold because of the looming PTC deadline.
“In order to keep new jobs coming from wind energy, we need to see important state and federal policies in place,” says David Loomis, director of the Illinois State Center for Renewable Energy. “We’re on the cusp of seeing real price declines, which is why the subsidy is needed. In three to five years wind energy will be cost-competitive with other forms of electrical generation without the subsidy.”
Illinois ranks as the 4th biggest US wind state in wind-powered generating capacity, with 404 turbines installed.
US wind developers rushed to install 1695 megawatts (MWs) of capacity in the first quarter of 2012 ahead of the expiration, 788 turbines in 17 states. The country’s total capacity is 48,611 MW, after growing 31% in 2011. The top five states in 2011 were California, Illinois, Iowa, Minnesota and Oklahoma.
The PTC has bipartisan support across both houses of Congress and from business groups including the National Governors Association, the U.S. Chamber of Commerce, the National Association of Manufacturers and the American Farm Bureau Federation.
For more on the House bill to create bonds that would extend wind and clean energy incentives:
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