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Wind industry advocating tax help, renewable standard

Aided by a tax break that helps keep costs in line with fossil fuels, the wind-energy industry has hummed in recent years, generating annual growth rates of 25 percent or more.

Wind power, once the province of a few entrepreneurial executives looking for alternatives to coal and other “dirty” fuels, now churns out enough electricity to light 3 million homes. The American Wind Energy Association (AWEA) counts more than 1,000 members, including giant companies such as General Electric. Five years ago, the trade group had just a couple hundred members.

Along with the industry’s growth has come new lobbying muscle, which includes a traditional lobbying tool: a map of the United States scattered with dots representing the jobs the industry creates.

As the industry holds its annual trade show in Los Angeles this week, its advocates in Washington are pushing to win support for two measures that could put even more wind behind its sails, or, rather, turbines – a federal standard for renewable energy production and a multiyear extension of the all-important 1.9 cent kilowatt-hour tax break that reassures Wall Street of the industry’s financial stability.

As the industry nears its biggest legislative victories ever, however, advocates also are fending off efforts to clip wind’s wings.

Rep. Nick Rahall, a Democrat from coal-rich West Virginia, for example, has authored a bill that wind advocates say would stop the industry in its tracks.

The measure, scheduled for a markup this week, would require the Fish and Wildlife Service to issue regulations regarding wind power development. In particular, the service would weigh what effects a wind farm could have on birds and bat populations.

Wind supporters say the rule could shut down production for months, if not years, for little reason. AWEA says household cats are a bigger threat to birds than turbines are.

“This program will strangle our promising wind power industry before it can realize its immense promise,” an AWEA fact sheet states.

In the Senate, wind’s main critic, Lamar Alexander (R-Tenn.), is likely to sponsor anti-wind language when the Senate takes up the energy bill, perhaps as early as next week.

Critics of the federal renewable energy mandates also are shopping a “clean-energy” proposal that would include nuclear power, which doesn’t emit greenhouse gases, in the favored fuel mix.

Such a measure effectively would minimize the impact of a renewable portfolio standard (RPS) on wind development, but lobbyists give it little chance of succeeding given continuing wariness over nuclear power.

As now written, the RPS would require utilities to get 15 percent of their power from renewable energy sources by 2020. The measure, which is opposed by utilities in areas where wind isn’t a viable power option, could bring a Senate filibuster,
lobbyists said.

For the first time, AWEA bought radio and TV advertisements in six states in support of the renewable energy standard over the Memorial Day recess. The states were chosen because their senators had yet to say whether they would support an RPS.

If it gets through, the renewable portfolio standard would be particularly beneficial to wind energy because wind is cheaper than other types of renewable energy.

While other renewables are eligible for the break, 95 percent of the credit has gone for wind development.

Wind currently generates less than 1 percent of the total power produced in this country. AWEA legislative director Jaime
Steve said the renewable standard could generate as much as 7 percent of the total power production.

For wind to take a larger market share, it will require construction of large transmission lines from windy rural areas to large “load” areas that need power. Transmission lines are hard to place, however, over not-in-my-backyard opposition.

That is why the industry rejects an attempt, also in Rahall’s bill, to rescind a provision in the Energy Policy Act of 2005 that sought to expedite the siting process. Critics argue the provisions reduce local control of power projects.

Of even more importance to wind is a long-term extension of the 1.9 cent kilowatt-hour tax break that helps wind to compete with coal and other traditional power sources, such as natural gas and nuclear.

Traditionally, tax writers have limited the tax to one- or two-year increments to keep the tax score low.

Industry wants a 10-year extension. At a cost of at least $20 billion, the price tag is likely to be too high for even a Democratic Congress, which is putting a premium on renewable-energy development.

Senate tax writers are looking instead at a five-year extension as part of a total energy tax package that could cost as much as $25 billion, one lobbyist said. The House’s energy tax provisions are likely to be more modest, but would extend the production tax credit to three years.

By Jim Snyder

The Hill

5 June 2007