A road map for smart energy policy is clear: all signs are pointing to the need to extend the renewable energy Production Tax Credit (PTC).
A Nov. 8 op. ed. on The Hill's Congress Blog by Christine Harbin of the Koch-funded Americans for Prosperity doesn’t sufficiently address these issues. Instead it’s a road map to confusing the conversation on energy policy, rather than clarifying it.
The “Marginal Well” and “Enhancing Oil Recovery” tax credits proposed by Ms. Harbin to go on the chopping block are actually costing American taxpayers zero dollars. According to an August 2010 study by Wood Mackenzie, “Energy Policy at a Crossroads,” these tax credits have been used zero times, providing zero dollars to the industry. Cutting these unused tax credits alongside the PTC isn’t even-handed—it’s a recipe to kill thousands of American wind energy jobs and cripple an industry which has set all-time records for new power production.
This month the American public once again gave wind power a yes vote. Voters returned an overwhelming majority of PTC supporters from both parties to Congress, as well as President Obama, who campaigned on his support for wind power (prompting Gov. Romney to say in their second debate that Iowa wind jobs are “real jobs”).
Among the outspoken Republican wind champions re-elected were Reps. Dave Reichert (R-Wash.), Steve King (R-Iowa) and Tom Latham (R-Iowa), and Sen. Dean Heller (R-Nev). In Maine, Independent and wind project developer Angus King fended off attacks to win an open Senate seat.
Extending the PTC is essential for a serious “all-of-the-above” energy plan to ensure a diverse mix of sources to protect our national security and our economy. If Congress were to allow the PTC to expire, wind energy would be the only form of energy generation without any federal support.
The PTC for wind is tax relief – not a subsidy – and it only rewards results. Unless you assume that all the money people and companies earn in the private sector belongs to the government, a tax reduction is different from government subsidies or loan guarantees. The tax credit simply leaves more money in private hands. In this case, anyone who makes renewable energy qualifies.
And it doesn’t cost taxpayers a dime, because of the local, state, and federal taxes the expanded industry then pays.
While incentives for other energy industries have been permanent fixtures of the tax code for up to 90 years, the tax relief for wind power has always been extended on a short-term, one- or two-year basis—an approach that hampers wind companies’ ability to plan and invest for the future.
Even so, by lowering the federal income tax on operators of wind farms, the PTC has attracted over $15 billion a year in private investment and allowed American wind power to compete with traditional energy sources.
As Republican operative Karl Rove recently said, the PTC is a market mechanism that doesn't pick winners and losers, but merely creates the incentive for private investment needed by a growing new American industry.
Wind energy creates thousands of jobs in the United States and boosts rural communities across America. Under the last Bush Administration, the U.S. Department of Energy reported that wind can supply 20% of the nation’s electricity by 2030.
Achieving this goal will support 500,000 good-quality American jobs, with an annual average of more than 150,000 directly employed by the wind industry. And property tax payments to local governments will increase to more than $1.5 billion a year, plus lease payments to rural landowners of more than $600 million a year.
So far wind energy remains on track to achieve all these results, but allowing the PTC to expire would be a severe and costly setback. Congress should act quickly to keep private industry at work on a diverse national energy portfolio and a new U.S. manufacturing sector.
Kelley is vice president of public affairs at the American Wind Energy Association.