The wind industry, fighting to hold onto a generous tax credit set to expire in December, has been arguing that it does not need the support forever – just a little while longer, until it can compete with fossil fuels on its own.
The tax break subsidizes wind power by 2.2 cents a kilowatt hour to bring its cost closer to that of conventional fuels, and it has periodically been renewed by Congress with support from both parties. But like other subsidies for alternative energy, it has been tarred in some people’s eyes by the government’s investment in the failed solar company Solyndra and has become a wedge issue in the presidential contest. President Obama wants the credit extended, while Mitt Romney has urged that it expire as scheduled.
But while campaigning on Friday in Iowa, a state with a lot of wind business, Mr. Romney seemed to be opening the door to a different position – or at least allowing himself some wiggle room should a compromise be found. “We will support nuclear and renewables but phase out subsidies once an industry is on its feet,” he said, without offering more specifics.
Opponents of the tax credit say the wind industry is looking for a never-ending hand-out, but some Republicans support extending the credit as long as it includes an explicit phaseout over a set number of years. One of those Republicans is now pressuring the wind industry to propose a detailed schedule.
“It is clear to me that many of my colleagues have become increasingly skeptical of the industry’s claims that wind needs ‘just one more extension,’ to become competitive,” Representative Ann Marie Buerkle of New York wrote last week to Denise Bode, president of the industry’s main trade group, the American Wind Energy Association. “I believe that my colleagues will only support an extension if there is a timely phaseout of the credit.”
Although the association says it is discussing different ways to restructure the credit, it has avoided endorsing a phaseout, saying the industry needs a one-year extension just to stay afloat. Any wrangling over the terms of how the credit might diminish over time should be part of the more comprehensive tax reform effort Congress is to take up next year, said Peter L. Kelly, a spokesman.
“We’ve always said wind energy won’t need a tax credit forever,” he said. “We’re committed as an industry to looking at options for the future of the production tax credit next year during corporate tax reform, when all energy incentives will be on the table.”