“With the Department of Energy and the American Wind Energy Association regularly crowing that wind is cost-competitive with (or more competitive than) conventional generation sources, there is no justification for further subsidies. The wind training wheels have been on the bike since 1992. They have done their job and it is now time to remove them.”
As winter approaches, Congress is being overrun by wind industry lobbyists (again). Their annual year-end money dance has become routine as we have seen the 1992 energy production tax credit die more deaths than the proverbial nine-lived cat.
Just as routinely, we have become accustomed to picking up the newspaper on New Year’s Day to read that in the cold, dark holiday night, Congress has revived the production tax credit (again).
Over time, Congress has supported throwing additional taxpayer money at the expired or expiring production tax credit, often at the eleventh hour. It stands to reason that aggressive wind developers in both blue and red states have influenced the decision to support the production tax credit.
“Subsidy” is a lightning-rod word. Subsidies must be justified as furthering the public good. Wind energy’s positive benefits are regularly overstated to the public, while wind’s negative impacts are understated. Because of this flawed value equation, wind energy has enjoyed the public’s favor and gratuitous federal subsidy dollars (in addition to state mandates).
For the sake of our environment and the economy, it’s time for Congress to finally let the production tax credit subsidy die.
Prominent players in the wind industry now admit the PTC is no longer needed. According to Ahmad Chatila, CEO of SunEdison (which is now in financial difficulty) “if the (production tax credit) expires we will be fine, we can get by.” Ben Fowke, CEO of Xcel Energy told investors that their wind assets are at parity with fossil and he believes that will remain true even with the expiration of tax credits.
Finally, Armando Pimentel, head of NextEra’s renewable development unit, predicts that losing the PTC would have only a temporary impact on construction in 2017 but development will ramp back up in 2018.
The wind PTC expired (again) in December 2014. Because the wind lobby inserted a “begin construction/safe harbor” provision into the law, and thanks to loose Internal Revenue Service rules that allow it, wind projects we don’t even know about yet can still sneak in as PTC-eligible even if they have not turned a shovelful of dirt. The wind industry is losing its window for starting projects, so the wind lobby is back in holiday mode, applying pressure in Congress (again).
Last summer, the Senate Finance Committee voted out a $95 billion tax extender bill that included a two-year extension of the wind production tax credit (2015-2016). The production tax credit was the third most expensive provision in the bill at $10.5 billion.
In October, U.S. Sen. James Lankford, R-Okla., submitted a bill to end the wind production tax credit. In the House, the Production Tax Credit Elimination Act offered by U.S. Reps. Kenny Marchant, R-Texas, and Mike Pompeo, R-Kan., is still pending, and new co-sponsors have signed on every month since the bill was introduced.
We might see action on the production tax credit by year’s end, and it won’t be a surprise if votes finally occur while the rest of the country is sipping eggnog at holiday parties (again).
The wasteful production tax credit has become politically toxic, gaining the nickname “wind welfare.” We cannot afford more billions to spur the growth of a mature industry that does little good.
With the Department of Energy and the American Wind Energy Association regularly crowing that wind is cost-competitive with (or more competitive than) conventional generation sources, there is no justification for further subsidies. The wind training wheels have been on the bike since 1992. They have done their job and it is now time to remove them.
The production tax credit has rarely been considered in the House or Senate as a stand-alone vote. The last time was 2012, in New Jersey Democratic Sen. Bob Menendez’s amendment to the transportation bill. It failed.
If the Senate and House consider the wind production tax credit in the eleventh hour (again) this year, it must be as a stand-alone vote in each chamber. That way, the wind lobby cannot gain a free ride by attaching to the more beneficial tax credits seen as “must pass.”
If U.S. wind development leaders are telling us they don’t need all that production tax credit money, then why would members of Congress throw it at them (again)?
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Rand Stowell of South Freeport, Maine is chairman of Friends of Maine’s Mountains. Lisa Linowes contributed to this piece.