Popular wind-energy tax credit stumbles in Congress

Source: Allison Sherry,The Denver Post • Posted: Monday, April 2, 2012

Vestas employees work on vortex generators at a manufacturing plant in Windsor. Vestas has four plants in eastern Colorado. It and others in the wind-energy industry rely on a tax credit that has broad support, but its extension can’t seem to pass Congress.(AAron Ontiveroz, Denver Post file)

WASHINGTON — Though the wind- energy tax credit is widely supported among Republicans and Democrats here, the push to get it extended has become an almost full-time job on the part of a handful of senators, including Colorado’s two Democrats.

Colorado’s entire delegation — save GOP Rep. Doug Lamborn of Colorado Springs — supports an extension. So does Iowa’s congressional delegation. Lots of senators and House members, both liberals and conservatives, have signed up to support it.

But the production-tax-credit extension — which costs $4.1 billion over 10 years and includes some other renewables such as geothermal — has thrice failed in the U.S. Senate.

“If anything, the drumbeat gets louder that we need to do something,” said U.S. Sen. Mark Udall, D-Colo. “It may take longer than we all want.”

Wind has a good business story that Democrats and Republicans love: Manufacturing sites have grown from 30 in 2004 to more than 400, sprawling across congressional districts in 43 states and employing 30,000 people in a sector otherwise left wanting in the latest economic downturn.

Operators receive the tax credit — worth 2.2 cents per kilowatt-hour generated — only once turbines are up and producing power. Industry types argue that achieving a fruitful production line is laborious and expensive. The turbines themselves cost several million dollars.

“I’m sympathetic now,” said Rep. Mike Coffman, R-Aurora. “This industry, its business model, seems to be built with the continuation of these subsidies, and so I think if you pull the rug out from under them right now, you’re going to hurt a lot of jobs.”

Some members, such as Lamborn, will never support the production tax credit because they believe the government should not pick winners and losers in the private sector.

The tax credit has been extended seven times in 10 years. In 2001, 2002 and 2003 it expired, and Congress

Wind-powered turbines generate electricity at the Ponnequin Wind Farm in Weld County. The industry employs 30,000 people, but jobs are threatened by Congress’ inability to agree on extending a widely-backed tax credit. (Associated Press file)

had to go back and reactivate it.

But Capitol Hill is not exactly a place of kumbaya at the moment. Even measures generally supported by both sides, such as the surface-transportation bill, are being funded in 30- and 90-day increments.

Jobs depend on dysfunctional D.C.

Efforts to extend the wind tax credit this year read like a tale of Washington dysfunction: The Senate tried in January to tuck it into lengthening the payroll-tax cuts, but it didn’t stick.

Then it was almost included as an amendment in the transportation overhaul, but a Michigan senator attached it to some other renewable-energy tax credits that were unpaid for — highly unpopular in the current climate — so the amendment was not included.

Then just last week, another version failed to pass again in the Senate. The House has a version too, but because it’s not paid for, most Colorado Republicans are not co-sponsors.

“It’s nuts,” Sen. Michael Bennet said. “It’s like Congress will get around to it when Congress is ready to work on it, but that’s cold comfort for people getting laid off across the country and the state of Colorado.”

A delay in the tax extension, say members of Congress and the industry, could cripple manufacturing for 2013. The impact is greater now than it was 10 years ago because domestic manufacturing has grown so quickly.

Colorado alone has about 1,600 people working for Vestas in four manufacturing plants: one in Brighton, one in Pueblo and two in Windsor. Ditlev Enge, Vestas’ chief executive, said this year that if the credit were not extended, there would be plant layoffs.

“It could disrupt a large and growing U.S. manufacturing sector that has created thousands of jobs across the country, many in areas with depressed economies,” Vestas vice president Jon Chase said in a statement. “An extension of the tax credit is a win for American workers and for domestic energy production.”

Bennet, Udall and most of the House members vow to keep working on the extension — after Congress gets back to Washington in a couple weeks from a two-week Easter recess.