House lawmakers have proposed changes in their tax reform
bill that renege on a bipartisan 2015 deal to extend and phase out the
Production Tax Credit (PTC) by 2020. Their bill will create a ripple effect of
consequences the opposite of their stated intentions for tax reform: a better
environment for American businesses and opportunities for American workers.
The Production Tax Credit (PTC) is an excellent example of a
market-driven policy that has actually worked. Congress designed the PTC to function
as a tool developers could use to access the private capital they need to build
wind projects. It’s a production-based credit
that is only paid when energy is being produced—if projects don’t work they
don’t get the credit. Just two years ago, Congress created stability by phasing
down the credit, but now the House is sowing uncertainty.
There is more to creating an environment for
businesses to thrive than lowering taxes—businesses need stability to invest
and hire confidently. Last year, wind energy added jobs nine times
faster than the overall economy. The
existing five-year PTC phase out policy will help grow another 50,000 American
jobs by the end of President Trump’s first term. Many of them will go to
veterans. The U.S. wind industry employs veterans at a rate 50 percent higher
than the typical industry. And more than 8,000 of these new jobs are expected
to be at U.S. factories, which the President describes as the “backbone of our
economy.” Keeping the current investment
policy will create an additional $85 billion in economic activity through 2020,
according to Navigant Consulting.
The stability created by the 2015 PTC extension is showing.
American wind jobs have boomed, and private infrastructure investment has
soared, driving economic development and prosperity across the nation. Today,
there are nearly 85 gigawatts of installed wind capacity in the United States,
powering the annual electricity usage of 21 million American homes. American Wind Energy Association reports that
13,759 megawatts of wind power capacity is under construction in 22 states
across the nation. Another 4,248
megawatts of wind are in advanced phases of development across 11 states,
making total activity taking place in 29 states. That’s economic development in more than half
Wind energy also brings new economic development to rural
communities in need of new opportunities. It provides jobs and tax payments
that are being used to support schools, rebuild roads and bridges, and fund law
enforcement. The fact is, companies capable of investing millions of dollars
into a community simply don’t look to small rural towns to expand their
operations. They often have employment and infrastructure needs that small
towns just can’t provide. That’s why wind development is a perfect fit for
But now, all that development is at risk. The House’s
proposal changes the rules in the middle of the game for the wind industry, and
it creates new regulations for PTC eligibility that businesses cannot travel
back in time to meet. Companies have made multi-billion dollar investments
using one set of rules, and the House is proposing retroactive changes to them.
Lost investments cannot be recouped, contracts will be broken, and ultimately
it will be American workers that pay the price.
Half of the wind projects scheduled to be built between now
and 2020 will not go forward, according to Bloomberg New Energy Finance. Fifty
billion dollars of private investment is at risk under this proposal, which if
passed will effectively kill factory orders for new turbines and wind farm
construction jobs will dry up, putting thousands out of work.
Derailing an effective policy that phases out in just over two
years is no way to drive economic growth.
– like people – thrive on consistency. Businesses also depend on a predictable, stable,
pro-growth tax policy. The PTC extension and phase-out is
accomplishing its intended purpose. Changing the rules in the middle of wind’s economic
boom would be detrimental to businesses, and beyond the bottom line, it would hurt
real American families.
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Congress must not change the rules on an energy
sector that contributes so much to the American economy. A deal is a deal, and
Congress should honor the one it made in 2015.