Sen. Tom Carper (D-Del.) said Thursday that he plans to reintroduce a bill that offers tax credits for a limited amount of offshore wind projects.
“We’ve been trying to get that done. As it turns out when [the Congressional Budget Office] prices that — they score that — it’s not cheap. And so pretty high score, hard to get it done,” Carper said during an event hosted by the Center for American Progress Action Fund in Washington, D.C.
That means the bill could run into some Republican opposition; many in the House and the Senate want to close — not expand — incentives to a suite of clean-energy technologies.
Many fiscal conservatives contend the federal government should not be in the business of jump-starting nascent industries through subsidies, especially in light of the growing federal deficit.
With Carper declaring, “We’re going to do tax reform this year,” he indicated he is not in a rush to throw his bill into the hopper.
Carper’s bill from last Congress would have reimbursed developers for up to 30 percent of the project cost through an investment tax credit. The credit would expire after offshore wind projects reached a combined generating capacity of 3,000 megawatts.
With the Obama administration recently offering some of the first-ever offshore leases on federal waters, Carper said the credit could help foster a domestic offshore wind industry to compete with China and others.
The investment tax credit would also get a key language change under Carper’s bill. Developers would be able to collect the credit so long as projects begin construction this year, rather than come into service.
That tweak emulates the revised wind production tax credit, which was extended for one year earlier this month.
While the investment tax credit throws a kickback to developers for the total project cost, the production tax credit repays wind power producers 2.2 cents per kilowatt-hour.
Carper said an investment tax credit is the only way to spark offshore wind development, adding that the language change would “shake things up in a very positive way.”
He said the risks to developers are greater for offshore wind, as technical expertise and scale is not as mature in the United States compared with onshore. The U.S., he noted, does not have a single operating offshore wind farm.
“The production tax credit for offshore wind does us no good. That’s not going to get one offshore windmill farm built,” Carper said.
Republicans, however, disliked the language change to the production tax credit. They said it expanded the program, ballooning the cost of a one-year extension to $12.1 billion through 10 years.
But there is reason to believe the investment tax credit, even with the language change, would fail to spur 3,000 megawatts of new offshore wind generation this year.
Developers are still unsure of how tax writers will interpret what counts as beginning construction, an energy tax and regulatory attorney said following the event. Such uncertainty could sideline prospective developers, the attorney said.
Regardless of what tax writers, the attorney said Carper's bill would still be a boon for the U.S. offshore wind industry.
— This story was updated at 1:09 p.m.