The wind industry says it’s teetering on the edge of a fiscal cliff.
More than 37,000 jobs are at stake, the industry warns, if policymakers don’t extend the production tax credit for wind, an obscure tax perk that has emerged as one of a litany of contentious issues that lawmakers are going to have to tackle during the lame-duck session.
Lobbyists on both sides of the debate say momentum is building to extend the tax credit, which expires at the end of the year. But a loose coalition of well-funded conservative groups is hoping to kill the tax credit by making it toxic for Republicans.
The strategy is twofold, according to tax-credit opponents interviewed by POLITICO: First, tie the tax credit to failed renewable energy companies like Solyndra that House Republicans have railed against for more than a year. Second, argue that the country can’t afford to maintain the tax credit at a time of economic uncertainty.
“Giving taxpayer money to these energy projects hasn’t been always successful. That resonates with people, given the fact that we’re $16 trillion in debt,” said Nick Loris, energy and environmental policy analyst at The Heritage Foundation, one of the conservative groups that strongly opposes extending the production tax credit.
Heritage and groups like the American Energy Alliance, which is tied to the billionaire Koch brothers, are planning a series of events aimed at building opposition to extending the tax credit as part of negotiations over a broader tax extenders package in Congress.
“Our goal is to make the PTC so toxic that it makes it impossible for John Boehner to sit at a table with Harry Reid and say, ‘Yeah, I can bend on this one,’” American Energy Alliance spokesman Benjamin Cole told POLITICO last month.
AEA was planning a Wednesday briefing on the tax credit with Rep. Mike Pompeo (R-Kan.) and Sen. Lamar Alexander (R-Tenn.), two of the most vocal opponents of the tax credit in Congress. Alexander, for example, has taken to the Senate floor several times in the last year calling on his fellow lawmakers to “stop the subsidies for Big Wind.”
AEA also plans an ad campaign coupled with a series of letters targeting Republicans who are leaning in support of the tax credit.
The group plans to put pressure on Republicans to oppose the tax credit by reviving longtime conservative criticism of President Barack Obama’s investments in renewable energy companies through the stimulus law.
“Taxpayers can’t continue to afford to throw money at these failed federal energy ventures,” Cole said. “Is this a good reason to continue borrowing money from China?”
And the group is circulating an October report it commissioned that argues the tax credit “disproportionately favors wind over other domestic resources like natural gas and even other renewables.”
“Continuing the federal wind PTC is not needed to maintain profitability or grow an ‘infant industry,’ and would serve no other purpose but continue recent trends that distort otherwise competitive wholesale power markets and lead to a host of hidden costs that will be paid by taxpayers and electricity customers today, and for many years to come,” the report says.
But opponents of the tax credit face an uphill battle, especially with the reelection of Obama, who has called for renewing the PTC. Mitt Romney had opposed extending the credit, despite its potential appeal in wind-rich swing states like Iowa.
Most Democrats and many Republicans from wind states, including Iowa Rep. Steve King and Sen. Chuck Grassley, strongly support extending the production tax credit by at least a year.
It appears to be a foregone conclusion in the Senate, where the Finance Committee in early August approved a tax extenders package with bipartisan support that would extend the PTC by one year.
Things are a little murkier in the House, where Speaker John Boehner received dueling letters in September on the tax credit. One, from 47 House Republicans, urged him to kill it. Another, from 50 House freshmen, called on GOP leadership to extend expiring tax credits.
“I’m fairly optimistic that it will happen in the lame duck,” said Richard Caperton, director of clean energy investment at the Center for American Progress.
Caperton said conservative lawmakers from the Midwest and other regions with growing wind production can’t risk the blowback from their constituents if wind facilities close because the tax credit isn’t extended.
“The attacks on the PTC are never going to overcome the impact of having wind energy jobs in your congressional district,” he said, adding that the attacks “are part of a national conversation that makes the PTC look more controversial than it really is.”
Already, major wind energy companies like Siemens and Vestas have warned of more layoffs if the tax credit isn’t extended, upping the stakes for the lame duck.
Obama used the prospect of dramatic job losses to pummel Romney on the issue during the campaign. “At a moment when homegrown energy, renewable energy is creating new jobs in states like Colorado and Iowa, my opponent wants to end tax credits for wind energy producers,” Obama said during an August campaign stop in Pueblo, Colo.
“It’s a really critical issue,” said Kevin Knobloch, an Obama campaign surrogate and president of the Union of Concerned Scientists. “The failure of Congress to renew the wind production tax credit is already leading to layoffs.” Knobloch stressed that he was speaking on behalf of the campaign, not the Union of Concerned Scientists.
Supporters of the wind industry took comfort in last week’s election results, arguing that Romney’s opposition to extending the tax credit cost him votes in key states.
“At the presidential level, we think it hurt Romney in Iowa clearly,” Sierra Club Executive Director Michael Brune told POLITICO. “It was clearly a close vote, so that could have been one thing that swayed a lot of voters.”
Denise Bode, CEO of the American Wind Energy Association, noted that wind energy supporters – including Republicans like Nevada Sen. Dean Heller and King in Iowa – came out on top in their tight races.
“I think it’s pretty clear that the election results are validating what we believe has been the public’s broad support at every level for wind energy continuing as part of a major manufacturing sector growth in the U.S.,” she said. “I think it’s not rosy to say what the facts are, and the facts are that overwhelmingly the champions of our policy of wind won.”
Supporters of the tax credit are launching their own lobbying and advocacy push in the coming weeks. The Sierra Club launched an ad campaign Thursday in a Metro station near the Capitol with signs that read: “Wind power is hard at work. It’s time for Congress to do the same.” And the Governors’ Wind Energy Coalition scheduled an event for Tuesday on Capitol Hill with Iowa Gov. Terry Branstad and Oregon Gov. John Kitzhaber.
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