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Production Tax Credit in Limbo

The production tax credit for renewable energy projects doesn’t expire for another year, but supporters are gearing up for a year-long fight in a presidential election cycle to win a four-year extension.
Bipartisan support from the Pacific Northwest came in the form of a bill introduced last week. Reps. Dave Reichert (R-WA) and Earl Blumenauer (D-OR) introduced the “American Renewable Energy Production Tax Credit Extension Act,” which would extend the PTC, currently set at 2.2 cents per kilowatt-hour, through 2016.

“Extending this long-standing tax incentive will leverage private investment to bring proven energy projects online, bolster domestic manufacturing and reduce electricity costs for businesses and families,” Reichert said. “Renewable energy resources play an important and increasing role in America’s total energy supply and reducing our reliance on foreign energy resources controlled by hostile nations. The certainty this bipartisan bill will provide can further spur growth in this vital sector, increase economic development and create jobs.”

The current extension through 2012 was enacted as part of the economic stimulus programs by the Obama administration, making it a lightning rod in some quarters.

“Wind energy means 75,000 jobs across the U.S. today and could support 500,000 American jobs across the country in manufacturing, construction, engineering, development and other fields less than 20 years from now according to a U.S. Department of Energy study,” said American Wind Energy Association [3] (AWEA) CEO Denise Bode.

Private investment generated over the last four years of relative PTC stability averages $17 billion a year, according to AWEA.

The wind industry was on a roller coaster ride last decade when the PTC expired and project construction immediately crashed. And the industry’s latest quarterly report on capacity expansions pointed out how plans for new projects in 2013 are essentially on hold.

There’s a different climate in Washington, D.C. now, with empowered Republicans taking aim at government spending and tax policy. It’s safe to say a proposal to end energy subsidies altogether wouldn’t have gotten much press a few years ago.

Now, one that targets them and would eliminate the PTC is on the table. Sponsored by a congressman from wind-rich Kansas, no less. Although the proposal had predated the Solyndra debacle, the drive to score points from that was not lost.

Rep. Mike Pompeo, (R-KS) told lawmakers that his bill would save the U.S. government up to $90 billion over 10 years in what he says is spending that distorts the market. His evidence is the failed Energy Department’s $535 million loan guarantee to the now-bankrupt Fremont, Calif., solar-panel maker Solyndra.

“The Solyndra scandal has demonstrated the danger of government interference in energy markets,” he wrote, calling his bill “a reasonable approach to ending the decades-long practice of trying to pick winners and losers.”

Equating Solyndra with 43 gigawatts of wind may not be fair, but it works for some politicians, apparently.

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