Talk about strange bedfellows.This morning, members of Congress will be hearing from groups including the Sierra Club and Americans for Prosperity – which virtually never find themselves on the same side of any fight – both urging a vote against a truncated tax cut bill the House plans to take up today.
Both are upset about the bill’s inclusion of a retroactive renewal for the production tax credit through this year, but for opposite reasons. Sierra Club and its green allies say the credit should run at least through the end of next year; AFP says it should not continue at all.
The emerging lobbying push is the latest chapter in a long-running subplot to the broader Capitol Hill fight over a year-end tax package. This week, the battle may hinge on two numbers: 30,000 and 10 billion.
The wind industry claims that reinstating the PTC, its main tax incentive, just for this year would cause more than 30,000 jobs to be lost, but conservative groups fighting it point to a nonpartisan estimate that the extension would cost the government nearly $10 billion in lost revenue, making it the most expensive piece of the broader “tax extenders” bill in which it is included. It was not immediately clear how to reconcile those two claims, but advocates on both sides of the fight said they would remain in high gear this week.
The push comes as Congress tries to wrap up its year-end work, which includes funding the government, enacting defense authorization and addressing expired tax incentives.
The PTC is among the more than 50 tax breaks that expired at the end of last year, collectively known as “tax extenders.” The House today is expected to pass H.R. 5771, which would retroactively renew the PTC and other expired provisions through the end of this year. Observers expect the Senate to follow suit before the end of the year. But Finance Chairman Ron Wyden (D-Ore.) has said he is ready to fight the package because it is unfair to the working class, and Sens. Ed Markey (D-Mass.) and Tom Udall (D-N.M.) are planning an event tomorrow to highlight their concerns with the clean energy provisions in particular.
Clean energy backers say the PTC should be extended for at least two years in order to provide much benefit.
Supporters say the House’s approach would amount to a three-week extension of a tax credit that is designed to incentivize renewable energy construction projects that typically take months to plan, meaning it would support almost no new economic activity. The American Wind Energy Association, whose members are the PTC’s primary beneficiary, says 30,000 jobs would be lost under the approach outlined in the bill.
“We call on all clean energy supporters in Congress and the White House to work to pass a two-year extension of these critical tax policies,” AWEA CEO Tom Kiernan said in a statement last night. “The three-week extension being considered by the House does not provide the certainty and stability needed to keep U.S. factories open and keep workers on the job. And if you think otherwise, try telling that to the American workers who will be laid off starting in January.”
Complicating the push for a longer PTC extension is the nonpartisan Joint Committee on Taxation’s estimate that the one-year PTC extension in the bill would cost the government more than $9.5 billion in lost revenue over the next decade, according to a summary from the House Ways and Means Committee. Conservative groups fighting the credit pointed out that is more than 20 percent of the bill’s total price tag of $44.7 billion.
Several aides said they were unsure how JCT reached that estimate, which is less than the $13 billion the tax scorers said a two-year extension would cost. JCT did not respond to a request for comment. The one-year PTC score of nearly $10 billion makes it the largest of the entire extenders package, surpassing even the research and development tax credit, which is typically among the most expensive items overall; that would cost about $7.6 billion over a decade in H.R. 5771, according to the summary. A two-year R&D credit extension would have cost more than $15 billion, JCT said earlier this year.
The PTC provides a $23-per-megawatt-hour credit to wind developers for the first 10 years a facility operates; they can claim the credit as long as construction begins or a “safe harbor” investment is made before the credit expires. Developers also have the option of claiming the investment tax credit (ITC), which covers 30 percent of a project’s cost, in lieu of the PTC.
AWEA’s claim that 30,000 jobs would be lost appears to be based on an assumption that history would repeat itself. The industry shed the same number of workers between 2012 and 2013, when an extension of the credit was similarly in doubt, according to a report released earlier this year (E&ENews PM, April 10).
The one-year extension is seen as a last-ditch attempt to allow taxpayers to claim the extenders on this year’s filings, after the White House last week scuttled a more ambitious bipartisan deal. The deal, negotiated by House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Majority Harry Reid (D-Nev.), would have made permanent some incentives, like the research and development tax credit and commuter benefits, extended the other provisions through the end of next year, and phased out the PTC through 2017.
While the phaseout would have been a boon for a wind industry that has long said it could wean itself off of government support under the right conditions, the one-year fallback that replaced it would do little good, supporters say.
“Retroactive extensions do not stimulate new economic activity in an industry such as ours. For the wind industry to continue to provide its economic, environmental, and other benefits to the nation, Congress must pass a PTC/ITC extension at least through the end of 2015,” AWEA lobbyist Aaron Severn said in an email to congressional staff yesterday, a copy of which was obtained by E&E Daily. “Further, the wind industry remains the only industry willing to consider a phase-out of a tax provision under the right circumstances in order to provide an appropriate glide path for the workers, communities, and companies involved.”
AWEA stopped short of asking members to vote against the underlying bill, but other supporters say it should be scuttled without a longer PTC extension.
Nearly a dozen environmental groups, including the Sierra Club, Environmental Defense Fund, Natural Resources Defense Council and League of Conservation Voters, are sending a letter to members of Congress today urging them to vote against H.R. 5771.
“Businesses and investors need stable tax policy to create jobs, innovate, invest capital, and deploy pollution-reducing energy technologies,” the groups write. “However, under H.R. 5771, only a small fraction of American businesses will be able to utilize these credits. Most projects will languish, given the uncertainty that has reigned over the last 11 months.”
AFP is alerting members this morning that it will include the extenders bill on its annual vote scorecard and is urging them to vote against the bill.
“Concerning is the fact that this legislation is being falsely advertised as tax relief for American families. In reality, this tax extender package is corporate welfare for the politically-connected wind energy industry,” wrote AFP lobbyist Brent Gardner in a letter being sent this morning. “A retroactive extension of these wind subsidies makes up over 20 percent of the total cost of the package.”
The fear is that an extension just through this year increases the risk that the credit will not be extended next year, given resistance from outside conservative groups and among House Republicans, one environmentalist involved in the effort said. While January will usher in GOP control on both sides of the Capitol, the PTC enjoys support from Republicans in windy states, such as Sens. John Thune of South Dakota and Chuck Grassley of Iowa.
A Senate GOP aide said this week that some Republicans would like to see the phaseout approach return next year, and Rep. Kevin Brady (R-Texas), a senior member of the House Ways and Means Committee, also suggested the phaseout could be included in future legislation (Greenwire, Dec. 2).
The Governors’ Wind Energy Coalition, a bipartisan group of governors from windy states, also sent a letter to Capitol Hill yesterday urging at least a two-year extension and pointing to benefits in their states from the PTC.
With so little time remaining before Congress is set to adjourn next week, PTC supporters face long odds of securing a longer extension before the end of this year. However, if the one-year bill ends up in defeat, it could create additional pressure for Senate Democrats to push for a two-year extension of all the credits in order to prevent complications on this year’s tax filings.
PTC supporters continue to face opposition from conservative groups like the American Energy Alliance, which has been leading a years-long effort to eliminate the credit. AEA, which has been linked to the billionaire Koch brothers, blasted yesterday’s proposal, citing the high cost of the credit and arguing that it would reward the political opponents of newly ascendant Republicans.
“Over twenty percent of this extenders deal, nearly $10 billion, is a handout to AWEA and its allies like the League of Conservation Voters who spent $75 million during the midterm elections in an effort to defeat Republicans,” AEA President Thomas Pyle said in a statement yesterday. “Now the House Republicans are prepared to reward them with a massive handout courtesy of the American taxpayer.”
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