WASHINGTON – Wind energy advocates on Wednesday pleaded with Congress to renew a tax break they credit with sending turbines spinning across the United States, amid opposition from critics who insist the industry no longer needs the help.
The diverse views were delivered during a House Oversight subcommittee hearing on the production tax credit, which allows project owners to reduce tax bills by 2.3 cents for every kilowatt-hour of electricity they produce over a 10-year period.
Unless Congress renews the 21-year-old production tax credit, the incentive will be limited to renewable energy projects that start construction before Dec. 31. President Barack Obama has asked Congress to permanently extend the tax credit at a price tag of $24.7 billion over 10 years.
Even though the credit has lapsed temporarily at least four times, it has encouraged investment in wind farms, helping to diversify the nation’s energy portfolio and drive down power costs, said Rob Gramlich, senior vice president for policy at the American Wind Energy Association.
“This tax credit … drives over $20 billion of private investment annually and brings electricity to 15 million American homes,” Gramlich told the House Energy Policy, Health Care and Entitlements Subcommittee.
But Robert Michaels, a senior fellow at the Texas Public Policy Foundation, said the wind energy industry no longer needs the help.
The significant growth in wind power, which represented the largest source of new generation capacity last year, proves that it is no longer an infant industry, he said. Renewable power mandates in many states already ensure demand for wind power, he added.
But there’s another option, said Dan Reicher, director of Stanford University’s Steyer-Taylor Center for Energy Policy and Finance.
Reicher said the best option is to slowly phase out the production tax credit while giving renewable power projects the ability to qualify for master limited partnerships and real estate investment trusts that offer unique tax treatment.
Legislation sponsored by Reps. Ted Poe, R-Humble, and Mike Thompson, D-Calif., would give renewable energy projects the chance to qualify for master limited partnerships.
Separately, the IRS could issue a ruling expanding real estate investment trusts to include renewables.
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