The election may be over, but the echoes of political rhetoric still linger, some of it surrounding soon-to-expire renewable energy tax credits. Much of the criticism falsely claims that these credits are government subsidies that don’t really help the renewable energy industry grow and have provided no jobs or economic activity since they were created.
The 112th Congress has returned for a last-gasp lame duck session aimed at finishing up some critical legislative matters before the books close next month. It’s a good time to counter some of the misinformation generated by the election campaign and show that tax credits are tools used by businesses to expand their operations, secure additional private investment and create quality jobs.
Extending tax credits for wind energy and cellulosic biofuel, which are set to expire Dec. 31, is part of a package of business tax benefits approved by the Senate Finance Committee earlier this year and being pushed for action in the short, congressional time remaining. Also included in the Senate measure were other important tax credits that should be reinstituted, such as those for biodiesel and infrastructure for alternative fuels that expired at the end of 2011.
Renewable energy stakeholders have some solid points to provide lawmakers with motivation to include the tax package in any legislative resolution that avoids the much-publicized “fiscal cliff” facing the nation.
It should be pointed out that production tax credits like those for wind, biodiesel, and cellulosic biofuels are not a cash handout from the government, but, instead, a tax credits based on the actual production of energy
The success of the wind industry provides a powerful example of the positive economic impact that these incentives can have. The wind energy PTC has the resulting effect of leaving more of the money from sales of wind-generated electricity in the private sector The PTC encouraged investment by clean energy firms like Vestas, which created almost 2,000 jobs in Colorado. Officials in Iowa say the PTC helped make the state the first to generate 20 percent of its electricity from wind, supporting up to 5,000 Iowa jobs and providing $11 million in annual land lease payments to Iowa farmers.
Unfortunately, failure to renew the tax credit will result in lost jobs. A study from Navigant Consulting says that without the wind energy PTC, “total wind-supported jobs will drop by nearly half, from 78,000 in 2012 to 41,000 in 2013,” a loss of 37,000 jobs. Industry leaders say 4,000 jobs have already been lost due to shutdowns and project cancellations stemming from uncertainty in Washington over federal PTC policy.
Navigant also said that without the PTC, private investment in wind would drop by nearly two-thirds, from $15.6 billion in 2012 to $5.5 billion in 2013.
According to the American Wind Energy Association, the PTC has helped drive a 90-percent drop in the price of wind power since 1980, benefiting utilities and customers.
Tax credits enjoy strong support from a wide range of business and investment leaders. For instance the wind tax credit has been defended by a coalition that includes Starbucks, Levi Strauss, North Face, and New Belgium Brewing, among others. This group says that allowing the PTC to expire is equivalent to “levying a tax on companies committed to buying American energy.” The group adds that “in today’s economic climate, a tax hike on American businesses buying American renewable energy is unwarranted.”
The PTC also has bipartisan support from 118 members of the House of Representatives. On the Senate side, one strong supporter, Sen. Charles Grassley (R-IA), says the PTC is just one of many energy incentives in the United States, adding that “no single energy tax incentive should be singled out over others before a broad-based tax reform debate takes place.”
Stakeholders can also point to polls that have long shown strong public support for tax credits, including, for example, a United Technologies/National Journal poll earlier this year that found 64 percent of those surveyed agreeing that Congress should extend federal tax credits that encourage production of alternative-energy sources.
The 25x’25 Alliance encourages its partners to keep abreast of developments in the short time left this year on Capitol Hill. The benefits of the PTC should be reinforced among lawmakers. It is a tool that helps boost the economy and enhance the nation’s energy security.