Lawmakers prepare bipartisan push to extend wind energy tax credit

Source: Evan Lehmann • E&E • Posted: Tuesday, November 1, 2011

Lawmakers are poised to introduce a bipartisan bill extending a key federal incentive for wind energy developers through 2016. It’s emerging during a stormy debate over renewable energy subsidies and as lawmakers struggle to identify massive spending cuts before year’s end.

Reps. Dave Reichert (R-Wash.) and Earl Blumenauer (D-Ore.) will seek a four-year extension of the production tax credit (PTC), which makes wind energy comparable in price to electricity derived from coal and natural gas by giving generators 2.2 cents per kilowatt-hour. They plan to introduce it later this week.

The bill begins what its supporters say is an urgent effort to prolong the wind credit before it expires at the end of 2012. That would avoid a similar slowdown in construction after the credit’s last disappearance in 2003, industry officials say.

The year-away expiration is already having a negative effect, according to some industry reports that claim developers are not planning beyond the 2012 time frame and have begun laying off employees.

“We need to renew these credits quickly so that construction and job creation in the wind industry can continue uninterrupted,” Blumenauer said in a statement. He and Reichert are members of the Ways and Means Committee.

An extension might mark Congress’ boldest action on renewable energy this year. But even modest action on tax credits faces political hurdles as House Republicans question federal energy loan guarantees while others target all subsidies — for fossil fuels and renewables.

The bill to extend the credit comes days after Rep. Mike Pompeo (R-Kan.) said he’ll offer one to disband it, along with other subsidies.

“The House majority has repeatedly disappointed anyone who wants to see smart policy,” said Joshua Freed, vice president for clean energy at Third Way, a centrist Democratic think tank. “It’s tough to see anything, including the smart extension of the PTC, succeed — though it would be really pleasant.”

A ‘good possibility’ for extension?

But a Democratic aide believes the bill has a chance. It would likely involve attaching the extension to a larger tax bill that could emerge from the “supercommittee” that is tasked with finding at least $1.2 trillion in cuts by Nov. 23.

“There’s a lot of open questions with how this year ends, and we’d like to make sure that it’s there as a moving vehicle,” the aide said, adding that the tax credit “should not be as partisan” as other clean energy policies. “I think there’s a good possibility for this.”

Still, the legislation could test the partisanship of energy issues in today’s Congress, where lawmakers have traditionally supported policies that align with their regional interests over political positioning. But the bill’s sponsors face an unfriendly atmosphere in which energy subsidies are being demonized, cash is short and Congress is maneuvering for the presidential election.

Yet members of both parties have celebrated the policy’s ability to create jobs, especially in the gusty Great Plains, out West and in Southern states like Texas where wind is growing.

Eight weeks ago, 24 governors asked the administration to extend the production tax credit for seven years to encourage long-term commitments from wind developers. Nine of those executives are Republicans, and some of them represent key election states, including Iowa, Florida and Pennsylvania.

House Republicans also held hearings last summer to identify roadblocks for renewable energy projects on public land. But they emphasized a need for faster permitting, not expanded subsidies.

The Reichert-Blumenauer bill is already attracting some Republican attention. One source said Reps. Tom Latham (R-Iowa) and Frank Lucas (R-Okla.) have signaled support for co-sponsoring the bill.

That’s not unusual. The tax credit has enjoyed GOP support in the past, including from Rep. Kevin McCarthy (R-Calif.), the majority whip. He proposed a 10-year extension of the credit in 2009, saying Congress needs to take “decisive action and create a stable wind energy development climate.”

McCarthy’s office didn’t respond to a request for comment. Two years ago, he said, “This decade-long extension of the production tax credit would also invest in new local jobs and energy to power our future.”