Production Tax Credit for Wind Power on Chopping Block

The Fiscal Cliff is not the only thing facing Congress as the year winds down. The Production Tax Credit for wind power is set to expire on December 31, and although there is bipartisan support for its extension it appears that it will be allowed to expire. There is a concerted effort, especially by the oil industry, to derail this tax credit. From the New York Times:

Opponents argue that the industry has had long enough to wean itself from the subsidy and, with wind representing a small percentage of total electricity generation, the taxpayers’ investment has yielded an insufficient return.

“Big Wind has had extension after extension after extension,” said Benjamin Cole, a spokesman for the American Energy Alliance, a group partly financed by oil interests that has been lobbying against the credit in Washington. “The government shouldn’t be continuing to prop up industries that never seem to be able to get off their training wheels.”

Obviously proponents of wind power disagree with that assessment. I have attached a video from the Wind Trade Association that talks about the jobs that will be lost if the PTC is allowed to lapse. From that same New York Times article:

Industry executives and analysts say that the looming end of the production tax credit, which subsidizes wind power by 2.2 cents a kilowatt-hour, has made project developers skittish about investing or going forward. That reluctance has rippled through the supply chain.

On Tuesday, Siemens, the German-based turbine-maker, announced it would lay off 945 workers in Kansas, Iowa and Florida, including part-timers. Last week Katana Summit, a tower manufacturer, said it would shut down operations in Nebraska and Washington if it could not find a buyer. Vestas, the world’s largest turbine manufacturer, with operations in Colorado and Texas, recently laid off 1,400 workers globally on top of 2,300 layoffs announced earlier this year. Clipper Windpower, with manufacturing in Iowa, is reducing its staff by a third, to 376 from 550. DMI Industries, another tower producer, is planning to lay off 167 workers in Tulsa by November.

Wind industry jobs range in pay from about $30,000 a year for assemblers to almost $100,000 a year for engineers, according to the Bureau of Labor Statistics.

The industry’s contraction follows several years of sustained growth — with a few hiccups during the downturn — that has helped wind power edge closer to the cost of electricity from conventional fuels. The number of turbine manufacturers grew to nine in 2010 from just one in 2005, according to the United States International Trade Commission, while the number of component makers increased tenfold in roughly the same period to almost 400, according to the Congressional Research Service.

I have always been a wind proponent, and remain one today. As usual in Congress business is done in such a haphazard way that getting to a managed policy that sets time-frames, parameters, and measurable impacts of tax policy just seems beyond our current membership. I come down on the side of giving a nascent industry some help for all of the obvious reasons. (Alternative energy, clean energy, less reliance on foreign sources) But a discussion needs to be had about time frames for continuation, with modeling done so that we understand wind viability within different energy pricing scenarios. The natural gas supply explosion has thrown some of the prior modeling right out the window. Congress needs to do its job, understand the ramifications of its own policies, and act in the best, long term interests of the country. As the fiscal cliff negotiations are showing that may be a bridge too far.

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