Editorial: Phase out, don’t cancel, wind, solar tax credits

Source: By Editorial Board, Lincoln Journal Star • Posted: Thursday, October 12, 2017

In theory, EPA director Scott Pruitt is right when he wants to eliminate tax incentives for solar and wind energy, as he said at an event Monday.

Coal, natural gas, solar, wind and other forms of energy generation should all compete on a level playing field, with consumer demand and market forces dictating Americans’ consumption habits in an ideal world. Similar incentives for the fossil fuel industry hinder such a truly free market.

In practice, though, the nation — and its burgeoning alternative energy industry — would be far better served by following through on the current agreement, which phases out tax incentives for both solar and wind energy within the next five years. Abruptly ending the wind-down early could jeopardize the recent, significant investment in renewable energy and the jobs it has created.

And while Nebraska’s largest such output comes in the form of ethanol and biofuels, the state has seen major investment in both fields. Nebraska’s renewable energy consumption has nearly quadrupled since 2000, according to the Nebraska Energy Office.

Wind power, in particular, has swept through Nebraska in that time, with 744 turbines producing 1,328 megawatts produced per year, according to the American Wind Energy Association. Though the state ranks 18th in installed wind capacity, hundreds more turbines are being developed and proposed here.

Cutting the tax incentives early would no doubt hamper the ability of Nebraska and the U.S. as a whole to produce clean energy — and create an imbalance in the energy industry, in light of incentive programs for harnessing coal and natural gas.

Congress in 2015 approved an extension of tax incentives set aside for the wind and solar industries with a designated phase-out schedule. The current 2.3-cent-per-kilowatt-hour for wind power produced begins to wind down this year before hitting zero in 2020. The solar credit, which covers 30 percent of designated investments, expires two years later.

If Pruitt one day gets his wish to “do away these incentives that we give to wind and solar,” it must be done in a manner that treats both clean energy and fossil fuels fairly.

The costs of producing the infrastructure needed to capture and harness both wind and solar are massive. Improving technology decreases the cost, making the drawdown of incentives the best way for financial responsibility and environmental stewardship to meet in the middle.

Rather than prematurely ending the existing incentive program, the current phase-out makes the most sense as clean energy industries grow toward self-sufficiency.