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This Week in Clean Economy: Wind Power Tax Credit Extension Splits GOP

Hopes for a key federal wind subsidy get a jolt while other renewable energy industries ask, what about us?

Feb 10, 2012

The wind industry's hopes for extending a key federal subsidy got a sharp jolt in recent weeks.

Some Republicans inside and outside Washington, along with the conservative U.S. Chamber of Commerce, have broken with many in their party to take a pro-green stance on the production tax credit (PTC) for wind projects. Wind operators say the 20-year-old subsidy allows them to compete with conventional fuels and supports thousands of jobs. It expires at the end of this year.

The American Wind Energy Association told InsideClimate News that federal support for wind has always been bipartisan, but Republicans are feeling pressure to speak out because of what's at stake. "Manufacturing jobs are on the line," said Ellen Carey, a spokesperson for the trade group. Lawmakers are "hearing from their constituencies who are employed in this industry."

Last week two GOP governors, Terry Branstad of Iowa and Sam Brownback of Kansas, sent a letter to the  20-member House-Senate committee that is negotiating a deal to extend the payroll tax holiday, asking members to fold a four-year PTC extension into the deal. Iowa ranks No. 2 in the nation for installed wind capacity behind Texas. Kansas is fourteenth but No. 1 for turbines under construction.

"Our states have experienced the economic benefits of wind energy first-hand," the governors wrote in their Feb. 1 letter. They pleaded for an immediate extension "so the wind industry has the certainty it needs to grow."

The U.S. chamber stunned many by expressing a similar position. The trade group is a longtime opponent of climate legislation and EPA rules limiting power plant emissions.

Speaking to a senate finance committee last week, Caroline L. Harris, the chamber's director of tax policy,urged Congress to "act now" to extend the PTC, saying "the damage is real" when such provisions lapse.

This week most of Colorado's Congressional delegation, including two Republicans, sent their own letter to the payroll tax committee urging a PTC extension. Colorado ranks third in the nation in terms of the amount of electricity it produces from turbines. It is also home to four wind manufacturing plants, including the world's largest wind-tower factory in the town of Pueblo.

"In a difficult economy, with thousands of high-quality jobs at stake across our state and the entire country, we urge the conference committee to extend the wind PTC as part of your upcoming package," the lawmakers wrote in a Feb. 7 letter.

The vocal support of the PTC is a departure from the position of many conservative Republicans in Congress.

For months the GOP-led House has used Solyndra, the solar startup that received $528 million in federal loans before it went bankrupt, to question the wisdom of federal green energy spending. Last week a pair of Tea Party-affiliated U.S. senators, Jim DeMint of South Carolina and Mike Lee of Utah, introduced a bill that would end all energy tax credits. The legislation is a companion to an existing bill in the House sponsored by Rep. Mike Pompeo (R-Kansas) and 18 Republican co-sponsors.

Supporters of these bills argue that the entire energy industry should stand on its own. "We shouldn't favor ethanol over hydrogen, nuclear over natural gas, or oil over renewables," DeMint said in a statement. "The free market economy works when everyone competes on a level playing field."

But AWEA says the PTC has paid off in jobs, and half the country's wind workforce, some 40,000 jobs, could be lost if it's left to lapse this year, according to industry projections.

Colorado could be especially vulnerable to job losses. Roughly 6,000 residents work in developing and installing wind projects and manufacturing turbines. About a third of them are employed by Vestas, the Danish wind turbine maker that has pumped more than $1 billion into building the state's four manufacturing facilities. 

Last month the company said it might have to lay off 1,600 American employees if the PTC expires this year.

The Congressional committee negotiating the payroll tax deal has until Feb. 29–when an earlier, two-month extension runs out– to extend the tax holiday by 10 more months.

Its passage is far from certain. Talks stalled this week as Democrats and Republicans clashed over how to pay for the bill, The New York Times reported. That could hurt the chances of the PTC getting much priority.

Some wind executives now say they'll settle for a one-year extension. "Our ask on the Hill ... this week is a one-year, full-value extension of the production tax credit," Steve Lockard, president and CEO of TPI Composites, a wind turbine blade manufacturer, said on Thursday at a panel organized by AWEA.

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