July 16, 2012
Iowa, U.S.

Romney favors end to tax credit for wind

Written by Adam B Sullivan | Iowa City Press-Citizen | www.desmoinesregister.com 15 July 2012

IOWA CITY, IA. – Mitt Romney’s opposition to wind power could put a damper on Iowa’s wind industry and its thousands of jobs, advocates say.

The federal wind energy production tax credit is set to expire at the end of the year. Staffers for Romney, the likely Republican presidential candidate, said he wants to end the credit, but didn’t specify whether it should be allowed to expire this year or phased out shortly after. President Barack Obama wants an indefinite extension of the tax credit.

Industry insiders and policymakers in Iowa, Republicans and Democrats alike, say ending the credit would hurt Iowa’s blossoming industry.

“It’s really going to slow down the expansion of wind energy,” said Harold Prior, executive director of the Iowa Wind Energy Association. “This could mean the loss of several thousand jobs in the industry.”

Many Iowa wind energy players don’t actually receive the production tax credit. Instead, Iowa companies produce components and equipment for operations that get the tax credit. Still, if the credit expires, demand for those Iowa products surely dips.

One company said the uncertainty over the tax credit’s future has led leaders to focus on exporting its products to other countries instead of banking on domestic buyers. Spain-based Acciona has been assembling wind turbines in West Branch since 2007.

“What we are doing in West Branch is diversifying our portfolio, not just focusing on the United States, but Mexico and Canada as well,” said Joe Baker, chief executive officer of Acciona’s North American windpower unit.

Prior compared the situation to the auto industry crisis a few years ago. Although companies were eventually bailed out by the federal government, uncertainty before the bailouts led to lost jobs.

“The uncertainty prevents the investors from committing resources to new wind farms and really creates about an 18-month gap, even if the production tax credit is renewed. Our association has had some companies that have gone out of business because of the uncertainty. They don’t know if they can sustain their operation,” Prior said.

Iowa is a leader in the wind industry, employing an estimated 7,000 wind industry workers. Twenty percent of electricity generated in Iowa is from wind turbines and landowners with wind turbines bring in a combined $14.4 million annually in lease payments, according to the Iowa Wind Energy Association.

Despite Iowa’s stake in wind and Romney’s apparent emphasis on winning the swing state, the GOP candidate has shown little love for the industry.

Literature from the Romney campaign calls wind energy “sharply uncompetitive” and said the industry “seems to be operating more on faith than on fact-based economic calculation.”

Romney’s stance on wind is likely to earn him little affection from Iowa Republican leaders.

John Archer – the Republican running to unseat U.S. Rep. Dave Loebsack, D-Ia. – said he might not have voted for the tax credit when it started 20 years ago, but now that it’s in place, he’d likely vote to extend it.

“Whether (wind tax credits) should have been started in the first place is questionable, but now that they are in place, they need to be maintained through their infancy and then let the free markets have their way after that,” Archer said.

Where Iowa Republicans and Democrats differ, though, is on how long the wind energy production tax credit should stick around.

Gov. Terry Branstad supports an extension of the federal wind energy production tax credit, but not permanently.

“As with ethanol, the governor believes the tax credit helps producers get their feet, and that eventually wind energy will be viable on its own,” Branstad spokesman Tim Albrecht said.

Some industry leaders aren’t asking for permanent support. Baker said wind energy could be successful without federal support in as few as five years.

“The production tax credit has helped the industry grow. There’s a time and place for it and over some period of time, they should phase down the tax credit, but we need some level of certainty in the marketplace over the next few years and then the phase-out process can begin,” Baker said.

Earlier this year, a Democrat-sponsored amendment to extend the tax credit failed in the Senate.

Additionally, federal support for wind projects is expensive; subsidies for wind totaled $5 billion in 2010, according to the American Energy Alliance.