Wind tax incentive in limbo 

There was bipartisan praise for the energy bill President Bush signed into law. The bill included higher fuel and appliance efficiency standards, a push for a sixfold increase in the use of ethanol at the gas pump and plans to kill energy-greedy incandescent light bulbs.

But before its passage the legislation was stripped of a provision to extend production tax credits, or PTCs, essential to renewable energy projects such as the wind farm proposed for Nantucket Sound.

“They are sort of playing chicken with it,” said Seth Kaplan, a senior attorney and vice president of climate advocacy with the Conservation Law Foundation.

The federal credits lapsed in the past but were always renewed.

Kaplan expects the PTCs will be renewed again before they expire next year.

In the meantime, a large piece of the financial puzzle for Cape Wind Associates – the company that wants to build 130 wind turbines on Horseshoe Shoal – is missing. A chunk of the more than $1 billion Cape Wind anticipates it will cost to build its wind farm would come from PTCs and Massachusetts renewable energy credits.

Mark Rodgers, spokesman for Cape Wind, declined to comment on the bill signed by Bush Wednesday. Cape Wind officials have said in the past that the company would need tax credits to make the project happen.

Offshore wind projects such as Cape Wind would certainly feel the effects of a delay in the renewal of PTCs, said Glenn Wattley, chief executive officer for the Alliance to Protect Nantucket Sound, an anti-Cape Wind group.

Without support from the federal government, such as is found in European countries, the project could fail after it is constructed and the public might be left holding the bag, Wattley said.

The decision not to extend the PTCs is political gamesmanship, Kaplan said. By removing a component from the bill that would have cost money, the Bush administration can maintain the legislation is not an expense to taxpayers. But the cost is minimal compared with the budget bill passed by Congress Wednesday, Kaplan said.

“It’s very critical that it (wind tax credits) be extended early next year so the industry has a longer-term planning horizon,” said Christine Real de Azua, spokeswoman for the American Wind Energy Association. Legislators have promised to turn their attention to the tax credits early next year, Real de Azua said.

The credits – which provide a 2 cents per kilowatt-hour incentive for the first 10 years of wind energy projects – expire at the end of 2008, she said.

The missing PTCs were not the only blow to renewable energy in the bill. To get it past the president’s pen, Democrats agreed to remove a federal version of renewable energy certificates for utilities.

The standard would have set a 15 percent goal for renewable energy as a portion of a utility’s portfolio. But similar programs already exist in most of New England and there would be little effect on a project like Cape Wind, Kaplan said.

Promotion of renewable energy projects is a legitimate role for the federal government, Kaplan said.

Mark Forest, spokesman for U.S. Rep. William Delahunt, D-Mass., agreed.

“We urged the House and the Senate to keep those provisions in the overall bill,” Forest said. Despite his stand against Cape Wind based on planning and siting issues, Delahunt believes tax credits are crucial for renewable energy projects, Forest said.

“He thinks we should do more,” Forest said. But Democrats also want to pay for laws they propose, he said.

Because subsidies for fossil fuel companies could not be diverted to PTCs, keeping those credits in the bill defeated thebroader policy, Forest said. “That battle will be fought out at a later date.”

By Patrick Cassidy
Staff Writer

The Cape Cod Times

21 December 2007