Tax break for wind power is up in the air, advocates say
WASHINGTON — Wind energy supporters said the industry could face a slowdown in 2014, and hundreds of workers could lose their jobs if Congress fails to renew a popular tax break credited with helping build the massive turbines spinning across the United States.
The wind tax credit expired at the end of 2012 before being renewed early this year, but it appears set to lapse again at the end of December. Supporters, who include many Democrats and some Republicans, have worked to extend the tax credit into 2014 and beyond.
But their work has been slowed amid the continuing partisan rift over federal spending and the unsuccessful push for an overhaul of the U.S. tax code rather than dealing with one item at a time. According to the congressional Joint Committee on Taxation, a one-year extension of the tax credit would cost $6 billion.
After experiencing a sharp slowdown earlier this year, the American Wind Energy Association said the industry experienced a surge in growth during the second half, with utilities signing a record number of contracts to build new wind farms, manufacturers rehiring furloughed workers and many other projects commencing construction. Among the highlights this year: MidAmerican Energy Co. announced in May that it would boost wind power generation in Iowa, adding up to 656 new turbines, by the end of 2015.
Wind energy advocates are concerned that if the credit is allowed to expire, and uncertainty lingers over whether Congress will work to restore it, orders could slow and manufacturers would have to let go of some of the same workers they only recently hired back. “Our industry still faces uncertainty in the medium and long term and needs Congress to address that next year,” said Rob Gramlich, senior vice president of public policy with the American Wind Energy Association.
The Production Tax Credit provides a 2.3-cent-per-kilowatt-hour benefit for electricity generated from utility-scale turbines during the first 10 years of a facility’s operation. Renewable energy projects that start construction before Dec. 31 would be eligible for the tax credit.
The wind provision is one of about 50 tax credits that are expected to expire at the end of 2013. U.S. Sen. Chuck Grassley, R-Ia., said the tax credits, which are usually dealt with together, failed to get a vote in Congress this year because key lawmakers thought they could include them as part of a major tax-reform bill.
Grassley told reporters that passage of a more sweeping tax overhaul appears unlikely. Senate Finance Chairman Max Baucus, D-Mont., told him last week that Congress expects to deal with wind and the other tax credits in 2014. “He wasn’t specific on when it would happen, but he said we are going to have to do (extensions of the tax credits) next year,” Grassley told reporters.
Critics of the 21-year-old wind tax credit contend the industry is mature enough that it should no longer need the help. A report from the Institute for Energy Research this month said the program is “terribly inequitable” because a majority of U.S. states that lack the geography and wind supply to support the power “unfairly shoulder the burden of these subsidies.” And in mid-November, 52 House members urged the tax-writing House Ways and Means Committee to put an end to the credit, which Congress keeps extending despite insisting that the wind industry must stand on its own. “The growth in wind is driven not by market demand, but by a combination of state renewable portfolio standards and a tax credit that is now more valuable than the price of the electricity the plants actually generate,” the House critics said in a letter. State renewable portfolio standards require a certain percentage of power to be generated from renewable sources.
This week, U.S. Sen. Tom Harkin of Iowa and 23 of his Democratic colleagues asked leaders of the Senate Finance Committee to renew tax incentives for renewable energy that have played a pivotal role in creating jobs and controlling greenhouse gas emissions. Allowing this credit to expire for wind production would threaten more than 80,000 jobs in nearly every state, they said.
Raju Chebium of Gannett’s Washington Bureau contributed to this story.