Industry is in trouble of Congress doesn’t extend tax credit By Peter A. Buxbaum, AJOT There’s good news and bad news out there for wind energy industry. Actually, it’s mostly bad news. This year has seen blazing progress in adding wind energy capacity for the production of the electricity in the United States. But the reason for the boom is that producers want to beat a December 31 deadline, in which a wind energy production tax credit will expire. Political wrangling in Washington has put in jeopardy a potential growth industry in the United States, one that has created tens of thousands of jobs in recent years and has spawned millions of dollars in new business activity. The failure of the United States Congress to extend the wind energy production tax credit past the end of this year has already seen its effects on this green industry, from canceled wind energy projects to hundreds of job losses. With the political season now upon us, it is unlikely that Congress will act to renew the PTC this year and wind energy companies are reacting accordingly. Many energy industries receive federal government subsidies of one kind or another, in the form of tax breaks, credits, or direct investment. In the case of fossil fuels, those subsidies have been around much longer than renewable energy credits, and many don’t have expiration dates. The uncertainty facing the wind energy industry as a result of the political games being played with the PTC has some companies that manufacture wind turbines and other parts halting production and laying off workers. The PTC provides a tax credit of 2.2 cents per kilowatt-hour of generated electricity for wind developers for projects that succeed in putting electricity on the grid. The PTC will expire on December 31, 2012, unless Congress extends it. Wind power capacity recently breached 50 gigawatt threshold, about a seven and a half fold increase in the last seven years. The PTC has not been allowed to expire since 2005. According to the American Wind Energy Association (AWEA), an industry trade group, the enactment of the PTC has stimulated an average of $15.5 billion a year in private investment in the U.S. over the past five years. Wind has installed 35 percent of all new U.S. electric generating capacity, a close second to natural gas.
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An extension of the PTC enjoys widespread, bipartisan support from groups as diverse as the National Governors Association, the U.S. Chamber of Commerce, the National Association of Manufacturers, Edison Electric Institute, the American Farm Bureau Federation, environmentalists, labor unions, and others. Members of the House and Senate from both parties have indicated their agreement that the PTC should be renewed. In early August, the Senate Finance Committee voted 19 to 5 to extend the PTC as part of the the Family and Business Tax Cut Certainty Act of 2012 in a bipartisan vote. “This was an extremely important step to provide critical certainty to keep people at work in wind energy manufacturing and construction,” said Denise Bode, CEO of the AWEA. This year saw continued remarkable growth in the wind energy sector, but as the year dragged on and with Congress unable to close the deal, wind industry companies have started to cancel projects and lay off workers. Opposition to the tax credit comes from free-market ideologues who say that wind and other renewable sources of energy must learn to compete on a level playing field with other sources of energy. That is the position taken by Republican presidential candidate Mitt Romney. President Obama supports the extension of the credit. Opponents of the extension also point to the availability of abundant domestic sources of energy such as natural gas. The 50-gigawatt milestone, a doubling of capacity in the last four years, means that U.S. wind turbines now power the equivalent of thirteen million A