VIRGINIA BEACH – The long shadow of presidential politics cast itself Tuesday over the opening of a three-day conference here on offshore wind energy, with Gov. Bob McDonnell standing awkwardly in the middle of it all.
It has been a rough year for the U.S. wind industry, in part because of congressional inaction over whether to renew a tax incentive for new wind projects, one costing taxpayers about $1.2 billion a year.
Paralysis on Capitol Hill has sparked thousands of layoffs in multiple states in the fledgling wind industry. It has spooked potential investors and is partially to blame for a Spanish company’s decision to pull the plug on a project off Virginia’s Eastern Shore to build the country’s first offshore wind turbine.
President Barack Obama supports renewing what is known as the Production Tax Credit, while Republican nominee Mitt Romney wants to scrap it. Romney’s stance has put a host of Republican governors in strong wind states – Iowa and Texas, for example – at odds with their party’s candidate on an issue affecting jobs and clean domestic energy.
McDonnell, meanwhile, has remained mum on the issue – while at the same time saying he champions wind energy in Virginia and especially offshore wind power.
“Obviously, you can’t have it both ways,” said Glen Besa, state director of the Sierra Club, an environmental group that supports renewing the tax credit. “This has become one giant political football. And unfortunately for Gov. McDonnell, he’s stuck in an uncomfortable place on this one.”
Once considered a vice presidential hopeful, McDonnell was asked in July about the wind incentive during a campaign trip to Iowa with Romney. He said he had no position.
This week, in advance of the Offshore Wind Power conference, to be held through Thursday at the Virginia Beach Convention Center, McDonnell’s office was asked whether he had a position yet on the wind tax break. A spokesman said he does not.
While other speakers Tuesday lamented legislative paralysis, Lt. Gov. Bill Bolling did not mention the tax credit debate in his address to the conference.
Citing $500,000 in state spending this year to promote offshore wind, Bolling told the assembled energy developers, experts and would-be manufacturers that “we want this to be the potential epicenter for this new industry.”
The production tax credit for wind projects was initially approved in 1992. It has been a major driver of wind power over the past decade, providing a 2.2-cent-per-kilowatt-hour credit for the first 10 years of energy generation.
The incentive has been extended four times, according to the Union of Concerned Scientists, and has been allowed to lapse three times. This year, it is due to expire on Dec. 31.
“This on-again/off-again status contributes to a boom-bust cycle of development that plagues the wind industry,” the Union of Concerned Scientists says on its website. “Lapses in the PTC causes a dramatic slowdown in the implementation of planned wind projects.”
Political conservatives portray the incentive as a wasteful government subsidy, a crutch for an energy source not able to stand on its own legs. At a time of deep deficits and budget cutting, they encourage an end to such tax breaks.
“Hardworking Virginians deserve an energy policy that is based on market principles, not one that rewards politically connected industries,” wrote Audrey Jackson, Virginia director of Americans for Prosperity, in a letter last month to the state’s congressional delegation.
Two bills that address the issue are on hold, and few expect any action until after the presidential election. A measure in the Senate would extend the incentive for two years. The other, in the House, would keep the credit in place for four more years.
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