Wind energy has small slice of energy pie but big lobbying push for tax credit
Credit: Written by Raju Chebium, Gannett Washington Bureau | Dec 7, 2012 | www.thenorthwestern.com ~~
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WASHINGTON – Wind power makes up a small slice of the nation’s energy pie, but its advocates have mounted a big lobbying campaign to persuade Congress to renew an expiring tax credit viewed as crucial for the industry’s survival.
Sen. Mark Udall, D-Colo., is playing a prominent role in this effort as he joins advocates who want Congress to extend the wind-energy production tax credit beyond its Dec. 31 expiration date.
Udall and Sen. Charles Grassley, the Iowa Republican who authored the first wind tax credit 20 years ago, want Congress to include it in a broader legislative package aimed at blocking sharp tax increases and automatic spending cuts set to take effect next year.
Lobbyists for virtually every industry that receives tax benefits are quietly pressing lawmakers to protect, preserve, extend or expand those benefits. Advocates of wind power, a renewable energy source, have been more vocal than most others.
The wind-power industry generated 3 percent of the nation’s electricity needs in 2011, according to the Energy Information Administration, which added that wind power has grown rapidly since 1970. Advocates say it is the fastest-growing energy source and among the cleanest.
The wind tax credit has been in effect on and off since 1992. The current credit – 2.2 cents for every 1,000 watts of wind energy produced – has been in effect continually since 2005.
The Western Governors’ Association – which includes the chief executives of 19 states, American Samoa, Guam and the Northern Mariana Islands – wrote to House and Senate leaders Friday, urging them do a short-term extension of the wind credit.
It’s “vital to the near-term future of renewable energy production in the Western United States,” according to the letter written by the group’s chairman, Utah GOP Gov. Gary Herbert, and its vice chairman, Colorado Democratic Gov. John Hickenlooper.
“We agree that the credit should not exist in perpetuity,” they wrote. “In the long run, we believe repealing all federal energy subsidies (tax or otherwise) is the preferred approach. No one energy company, or energy source, should receive preferential treatment from the federal government.”
Congress could decide against renewing the wind credit in 2013 because of its cost.
Grassley said the annual cost of the tax credits is $5 billion. But critics cite figures from the Joint Committee on Taxation showing the cost would be $12 billion annually.
Uncertainty about the future of the tax credit is already proving detrimental and wind-turbine makers in Colorado are beginning to cut jobs, Udall said.
“Enough is enough. These layoffs should be a wakeup call for all of our colleagues who oppose extending the PTC,” he said at a recent Capitol Hill lobbying event hosted by the Truman National Security Project. “Energy security is national security. We can’t project strength abroad if we are weak economically here at home.”
The production tax credit, he added, “supports American manufacturing and made-in-America energy.”
Grassley said it’s “stupid” for the U.S. to import oil when Congress could instead help a promising industry continue on the road toward eventual self reliance.
“This extension deserves a place in a year-end package of tax extenders to help give confidence and certainty to investors and to employers,” Grassley said. “There’s no reason to exacerbate the unemployment problem.”
Some examples of the recent lobbying push by supporters of the wind credit:
— Udall has given 24 speeches on the Senate floor this year to urge his colleagues to extend the credit.
— Hickenlooper, Democratic Gov. John Kitzhaber of Oregon and Republican Gov. Terry Branstad of Iowa pushed for the extension in a Capitol Hill event organized last month by the American Wind Energy Association, an industry group. The group says 37,000 jobs could be in jeopardy if Congress allows the tax credit to expire.
— The Sierra Club blanketed a Washington Metro subway station closest to the House of Representatives with ads late last month urging Congress to approve the extension.
— The week after Thanksgiving, the Truman National Security Project flew in many veterans who are now employed by the wind industry to Capitol Hill to lobby 45 lawmakers to renew the credit.
Their message: Veterans returning from Iraq and Afghanistan would lose their civilian jobs if Congress decides not to renew the tax credit though it has bipartisan support and helps an industry that’s working to reduce U.S. dependence on foreign oil.
According to lobbying disclosure documents filed with Congress, the American Wind Energy Association spent $1.81 million in the first three quarters of 2012 to influence lawmakers. That’s up from the $1.5 million AWEA spent last year.
In August, the Senate Finance Committee, where Grassley is the ranking Republican, approved legislation to extend the wind credit beyond this year. A House measure to renew the credit has 119 co-sponsors but hasn’t advanced.
Critics of renewing the wind tax credit say it’s unfair to fossil-fuel companies for the federal government to favor a small industry with a generous tax credit. After 20 years of getting a handout, it’s time for the wind industry to compete in the electricity marketplace like every other industry, they say.
“The government takes a little bit from all of us and gives it to a politically preferred group,” said Jack Spencer, an analyst at the Heritage Foundation, adding that the wind industry is “addicted” to the taxpayer largesse and has little incentive to become leaner and more efficient.
Critics like energy consultant Jonathan Lesser say the wind industry is unreliable because it can’t guarantee a steady supply of renewable energy. Turbines turn only when there is wind, which is not all the time, he said, adding that his research shows that the least amount of wind power is generated in the summer, when electricity demand is at its highest.
And there’s no good way to store the power to use later, when the demand is at its peak, he said.
David Brown, an executive with Exelon Corp., said the credit has done its job of helping the industry compete and must be allowed to expire. Though it’s the nation’s largest nuclear energy producer, Exelon has a small wind power business and expects to be a top-10 wind producer next year, he said.
The production tax credit is was never meant to be a long-term solution for an industry struggling to reach economic maturity, Brown said.
To really increase wind-power generation in the U.S., Brown said, Congress should scrap the tax credit and spend money on “research and development at the Department of Energy, instead of giving it out to folks as an incentive to build power where it’s not needed.”
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