Everyone can empathize with Charlie Brown when Lucy snatches
the football away just as he sets out to make a great kick. Argh!
The agony of defeat!
In the wind industry, Congress recently snatched away the
primary federal incentive for this power source. Meanwhile many other energy
sources continue to benefit from permanent tax incentives. The rules of the
game should be the same for everybody, and they can’t change at the last minute
for one team, while the opponent keeps the rules that benefit them in
The coal, gas and nuclear industries have received various
subsidies and tax considerations for up to 50 years, and some have been around
for nearly a century. In fact, there are
permanent major energy tax preferences, and three of them are for fossil fuels. The other is for nuclear. The primary tax
incentive for the wind industry, the Production Tax Credit the (PTC), on the
other hand, was enacted as part of the Energy Policy Act of 1992, and has been
allowed to expire four times causing declines in installations by up to 92% and
costing tens of thousands of American jobs.
The PTC currently offers 2.3 cents per kilowatt hour for the first 10
years of a projects life, and it is only paid when energy is being produced. According
to a DBL
Investors report, the federal commitment to oil and gas was five times
greater than the federal commitment to renewables during the first 15 years of
each subsidies’ life, and it was more than 10 times greater for nuclear. And a
by Conservatives for Responsible Stewardship found that implicit tax incentives
are larger for natural gas than for wind.
The best evidence of what the wind industry is capable of during
a stable policy environment is its dramatic growth between 2005 and 2012, the
longest stretch to date during which Congress did not allow the PTC to
expire. During that time, American wind
power saw 800% growth, and an average annual growth of 31%. Total investment in new wind farms reached
$105 billion, and a vast majority of all wind power capacity in the U.S. today
was installed. In the record year of 2012 alone, the industry installed over
13,000 megawatts of capacity. In the last
five years, wind costs have fallen 58%. The PTC has a remarkable return on
investment, too. The PTC can more than pay for itself in local, state and
federal taxes that are paid over the lifetime of the project.
The PTC is an example of a market-driven policy solution that
has worked. An entire industry has been
created because of the opportunity the PTC provided. Today, more than 500 manufacturing companies
in 43 states comprise the supply chain for the wind sector. In fact, The American Wind Energy Association
recently wrote that just one wind project obtained parts ranging from blades,
portions of the generator, and tower sections from factories in Kansas, Iowa
and Wisconsin. And, even the taconite to
make the steel came from Minnesota. Wind
is providing more than 50,000 Americans with good, family-supporting jobs; offers
family farmers and ranchers a new drought-resistant cash crop; and growing new wind farms has attracted over
$100 billion of private investment into the American economy since 2008.
In politics, it’s not always easy to do the right
thing. That’s why the wind energy
supporters appreciate politicians such as Senator Chuck Grassley(R-IA), who has
stood up to support the PTC. Leaders
like Sen. Grassley have seen first-hand how having a stable energy policy has
benefited their state through jobs and economic development. They also recognize that having a healthy
competition in the energy market helps keep energy prices low and creates a
diversified energy portfolio that provides security.
Wind energy is here to stay. As the fifth largest
electricity source in the U.S., wind is already providing the equivalent of 18
million American homes with clean, home-grown, American-made energy. Let’s not let the whims of politics play
political football with a successful policy. Businesses depend on a
predictable, stable, pro-growth tax policy. The PTC should be extended for the
longest practical term to help grow our economy, benefit consumers, create jobs
and improve our energy security.
We just can’t pull the PTC away from the wind industry the
way Lucy pulls the football away from Charlie Brown. It’s just plain wrong.
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