“The PTC was intended to be a temporary subsidy for a fledgling industry, but has morphed into a massive handout for large corporations, many of which are foreign owned—all at the expense of the American taxpayers. It’s a textbook case of corporate welfare…. It’s past time for the wind industry to sink or swim on its own merits.”
– Thomas Pyle (American Energy Alliance), “PTC Elimination Act Protects American Families,” April 22, 2015.
This week, Representatives Kenny Marchant and Mike Pompeo introduced H.R. 1901 to eliminate the Production Tax Credit (PTC), a subsidy for qualifying renewable energy (mainly wind power) that has been extended time and again since its enactment in 1992. The bill would tighten eligibility requirements for new wind projects, terminate the inflation adjustment provision saving taxpayers about 35 percent, and repeal the underlying statute to end all credits for existing projects by 2025.
Tom Pyle of the American Energy Alliance issued this statement:
The wind lobby says it wants certainty on the wind PTC and that’s exactly what this bill accomplishes.
The PTC was intended to be a temporary subsidy for a fledgling industry, but has morphed into a massive handout for large corporations, many of which are foreign owned—all at the expense of the American taxpayers. It’s a textbook case of corporate welfare. Every year Big Wind clamors for an extension of the PTC while at the same time claiming they don’t need the credit to be competitive. It’s past time for the wind industry to sink or swim on its own merits.
Congressmen Marchant and Pompeo are offering up reasonable reforms that give certainty to wind producers while protecting the long-term interests of American families. Now it’s upon the wind industry to meet Congress halfway and prove that they are ready and willing to get off the government dole.
Press Release Summary
The PTC Elimination Act establishes a concrete phase-out of the renewable energy production tax credit (PTC) and takes meaningful steps to ensure that it is not needlessly extended in the future.
The PTC was originally designed to help nascent renewable energy industries become economically self-sustaining. Yet over the years the credit has primarily become a large subsidy for a wind industry that no longer needs it. PTC was created in 1992, and has been repeatedly extended since, with decades of promises that it would no longer be needed after a few years. In addition, even after expiration of the PTC, facilities that secured eligibility before expiration receive the credit for ten years of production.
Wind power has grown tremendously since 1992 and is now a multibillion dollar industry. Capacity has increased 5,000% and production of energy by wind has surged from 2.8 million megawatt-hours to 167.6 million megawatt-hours.1 Businesses in the wind industry have represented to the Ways and Means Committee that the industry could survive with a credit worth 60% of the current credit.
Yet the wind industry continues to get a subsidy that, per kilowatt hour, amounts to over 10 times that received by other clean energy sources, such as natural gas and nuclear. This creates market disruptions, leading to generators’ paying for grid operators to take their wind energy, and endangering the environment by putting pressure on other clean energy and potentially forcing greater reliance on older forms of power.
The PTC Elimination Act would establish a phase-out and help secure the non-renewal of the PTC by:
1) Repealing the inflation adjustment that exists for current recipients of the PTC, reducing their subsidy by approximately 35% for their remaining time.
2) Clarifying the “beginning of construction” threshold (which must have been met by December 31, 2014, for new facilities to be eligible to start receiving PTC) to strengthen requirements that eligible construction be continuous, significant, and finite.
3) Repealing the entirety of the PTC’s statutory framework, Sec. 45 of the Internal Revenue Code, after December 31, 2025, to put a hard stop date on credits and deter extenders.
4) Expressing the sense of Congress that PTC should not be extended or renewed, either retroactively or going forward, and should remain expired as of December 31, 2014.
Proposals similar to the PTC Elimination Act have been estimated to save $9.6 billion over 10 years.2 By restraining PTC extenders, and considering current dollar value, this Act’s practical savings can be even greater. These will then be passed on to American businesses via an across-the-board offset applied to corporate tax rates, which are widely agreed upon as being too high for global competitiveness.
————————————-
The PTC Elimination Act of 2015 (H.R. 1901) can be read here.
phase out is still phase out. Eliminate it entirely; cold turkey no slow withdrawal. No more no how. Expressing the sense of Congress is futile. Write a damn law that has teeth. No need for the Treasury to bleed through 2025.
Tom: I think the proposal does not say another ten years but only that existing projects can get the (promised) subsidy for ten years, but with reductions from their present deal.
New projects would get nothing as is the case in 2015.
Of course your preference might be to end the subsidy for existing projects–and even go back and recoup monies already received! That would teach ’em!!
My main concern is “the sense of Congress” provision for no future extenders. That is woefully weak. I do appreciate the constraints placed on IRS redefining ‘begin construction’, but would be stronger if they just allowed deductions for already committed funds and made projects shut down.
I totally agree with Tom Tanton. Cut the semantics, and end it already – before anymore damage is done! While they play word games, peoples’ lives are being ruined and the environment continues to be destroyed in the name of the industrial wind charade.
Here in western New York State, we’ve got another greedy corporation (APEX) working to line the shores of beautiful Lake Ontario with close to 600 foot-tall machines – amongst peoples’ homes! Are they INSANE??? Other projects are also being proposed across rural-residential New York State by Havana Andy & his energy-illiterate crew in Albany.
If wind turbines were cars, these giant green boondoggles would have been recalled after the first sprawling mess went up decades ago. Greed + Ignorance = the Wind PTC (Pork-To-Cronies). If those who are voting to inflict this TORTURE on their fellow U.S. citizens were mandated to live within the footprint of an industrial wind factory, you could rest assured this insanity would STOP.
What’s up, I log on to your new stuff daily. Your writing style is awesome,
keep up the good work!
Why doesn’t the legislation also eliminate the nuclear PTC which is similar to the wind PTC. It would make sense as Cong. Pompeo seeks its elimination in his Energy Freedom and Economic Prosperity Act? https://www.govtrack.us/congress/bills/113/hr259/text
Wouldn’t huge majestic wind turbines look better that mercury belching coal fired power plants?We have to transition to clean energy someday.Unfortunately that transition should have been post oil embargo 1973.
Only the market should decide, and for new capacity, think of those clean combined-cycle natural gas plants versus industrial wind turbines that must be placed far away from the population.