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Wind energy tax credits defeated in Senate

The Senate
defeated the Stabenow Amendment
that would have among other
things, extended the Production Tax Credit for wind energy one year
and revived the expired 1603 Treasury grant. The Production
Tax Credit
(PTC) [PDF] provides an income tax credit of 2.2
cents per kilowatt-hour for the production of electricity from
utility-scale wind turbines. It is set to expire on December 31,
2012. Section 1603 of the American Recovery and Reinvestment
Act of 2009 allows wind project developers to choose to receive a
30 percent investment tax credit (ITC) in place of the PTC or the
equivalent cash payment from the Department of Treasury for the
value of the 30 percent ITC.

The Stabenow Amendment was defeated on 49 to 49 vote and
according to Senate rules needed 60 votes to pass. In an earlier
letter to various senators, the free-market coalition, the American
Energy Alliance
succinctly explained
 [PDF] why the tax credit should
not be extended:

It is increasingly clear that the intervention of politicians
and bureaucrats in the energy sector has had devastating economic
consequences and led to embarrassing scandals. Yet the Senate is
considering amendments to extend disastrous subsidies for windmills
and other form of politically-preferred energy sources. We urge you
to oppose these amendments.

The PTC was created by the Energy Policy Act of 1992. The wind
industry insisted at the time that it needed short-term help from
taxpayers and would soon be able to compete on its economic merits.
Twenty years later, wind is still uncompetitive, unreliable, and
expensive, as reported by the Energy Information Administration
(EIA). Yet Congress increased subsidies for wind dramatically in
recent years, to a record $5 billion in 2010 according to the
EIA.

Even with lavish subsidies and renewable mandates in many
states, windmills provide just 2.3 percent of America’s electricity
generation and according to estimates from the Energy Information
Administration, wind will only produce about 4 percent of our
electricity by 2035. Worse, redundant back-up capacity is required
for when the wind isn’t blowing and demand is high.

Wind has been used to generate electricity for over 100 years
and can no longer be seen as an infant industry. After decades of
subsides and special treatment, wind must someday stand on its own
as an economically sustainable industry. Now is a great time to
start….

Sounds about right. 

For background, see my 2010 column,
Wind Turbines Are Beautiful