The Production Tax Credit, or PTC, for wind energy expired at the end of 2013. Originally part of the Energy Policy Act of 1992, it has expired many times. As recently as 2007, "the wind PTC had no natural enemies," states a new report on the tax credit's future. But things have changed in the past couple decades.
Wind energy proponents have a lot to be worried about. There is growing opposition to it due to the Cuisinart-like slaughter of birds and bats — including the protected bald and golden eagles. And, increasing fears about health impacts, maintenance costs and abandoned turbines. Add to that, the overriding concerns about more government spending on green-energy projects.
Thomas Pyle, the president of the American Energy Alliance, which represents the interests of oil, coal, and natural gas companies, called the 2013 expiration of the tax credit "a victory for taxpayers." He explained: "The notion that the wind industry is an infant that needs the PTC to get on its feet is simply not true. The PTC has overstayed its welcome and any attempt to extend it would do a great disservice to the American people."
The changing conditions, the report cites, combined with "wide agreement that the majority of extenders are special interest handouts, the pet political projects of a few influential members of Congress," mean that "the wind PTC is not a sure bet for extension." Bloomberg declares: "Wind power in the U.S. is on a respirator." Mike Krancer, who served as secretary of the Pennsylvania Department of Environmental Protection, in an article in Roll Call, states: "Washington's usual handout to keep the turbines spinning may be harder to win this time around."
The American Wind Energy Association's website calls on Congress to: "act quickly to retroactively extend the PTC."
On April 3, The Expiring Provisions Improvement Reform and Efficiency Act, a tax extender package, passed out of the Senate Finance Committee and has been sent to the Senate floor for debate. There, its future is uncertain. (Note: the wind tax credit was not originally a part of the package. Senators Charles Grassley, R-Iowa, Michael Bennet, D-Colo., and Maria Cantwell, D-Wash., pushed for an amendment to add a two-year tax-credit extension.)
The "Declining Appetite for the Wind PTC" report predicts that the tax credit will follow "the same political trajectory as the ethanol mandate and the ethanol blenders' tax credit before it." The mandate remains — albeit in a slightly weakened state — and the tax credit is gone: "ethanol no longer needed the blenders' tax credit because it had the strong support of a mandate (an implicit subsidy) behind it."
The wind tax credit once enjoyed support from some in the utility industry that needed it to bolster wind power development to meet the mandates. Today, utilities have met their state mandates — or come close enough, the report points out: "their state utility commissioners will not allow them to build more." It is important to realize that the commissioners are appointed or elected to protect the ratepayers and insure that the rates charged by the utilities are fair and as low as possible. Because of the increased cost of wind energy over conventional sources, commissioners won't allow any more than is necessary to meet the mandates passed by the legislatures.
Despite the claim of "Loud support for the PTC" from North American Windpower, the report predicts "political resistance." North American Windpower points to letters from 144 members of Congress urging colleagues to "act quickly to revive the incentives." Twenty-six Senate members signed the letter to Senate Finance Committee Chairman Ron Wyden, D-Ore., and 118 signed a similar letter to Speaker John Boehner, R-Ohio. However, of the 118 House members, only six were Republicans — which, even if the tax-credit extension makes it out of the Senate, points to the difficulty of getting it extended.
Bloomberg cites the Wind Energy Association as saying: "the Republican-led House of Representatives may not support efforts to extend the tax credits before the November election." This supports the view stated in the report. House Ways & Means Committee Chairman David Camp, R-Mich., held his first hearing on tax extenders on April 8. He only wants two of the 55 tax breaks continued: small business depreciation and the R & D tax credit. The report states: "Camp says that he will probably hold hearings on which extenders should be permanent through the spring and into the summer. He hasn't said when he would do an extenders proposal himself, but our guess is that he will wait until after the fall elections. ...We think the PTC is most endangered if Republicans win a Senate Majority in the fall."
So, even if the tax credit survives the current Senate's floor debate (Senator Pat Toomey, R-Pa., offered an amendment that would have entirely done away with it), it is only the "first step in a long journey" and, according to David Burton, a partner at law firm Akin Gump Strauss Hauer and Feld, is "unlikely on its own to create enough confidence to spur investment in the development of new projects." Plus, the House will likely hold up its resurrection.
All of these factors have likely led Jeff Imelt, chief executive officer of General Electric Co. — the biggest U.S. turbine supplier — to recently state: "We're planning for a world that's unsubsidized. Renewables have to find a way to get to the grid unsubsidized."
Perhaps, the wind tax credit is really dead, leaving smaller manufacturers desperately seeking subsidies.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens' Alliance for Responsible Energy (CARE). Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations' combined efforts serve as America's voice for energy.