Despite wide-ranging support from President Obama, the U.S. Chamber of Commerce, and members of both parties from the affected areas, extension of a wind tax credit that is necessary to promote investment in the growing industry may be allowed to expire. Companies who build parts and create new technologies for wind energy systems are already beginning to slow production, expecting investment to drop in the upcoming year. Republicans are criticizing their own party as obstructionist as wind energy is a main issue in many districts:
Rep. Dave Reichert (R-Wash.) is so frustrated he’s thought about trying to go over House Ways and Means Chairman Dave Camp’s head to get legislation moving.
The credit doesn’t expire until the end of this year, but turbine makers are already feeling pain because developers can’t afford to lay bets that Congress will sort it out later.
The bottom line: It takes a long time to get projects up and running, and, amid tight budgets, subsidy scandals and election-year politics, there’s no guarantee that this tax break will catch a tailwind in time to avoid a crippling interruption in production.
On one level, the wind credit is just another casualty of the ongoing tussle between conservative budget hawks who want to rein in government spending and business-minded Republicans who support subsidizing industrial innovation. But what makes this tax break unusual is the damage that’s already being done — and the possibility that inaction could devastate an industry that Congress has propped up for two decades.
“It’s a horrible way to do business,” Rep. Steve LaTourette (R-Ohio) said. “But that’s the way the place works.”
Months of pushing, lobbying and counting votes has led nowhere, even though the credit is backed by Democrats and a long list of Republicans, including moderates such as Rep. Charlie Bass of New Hampshire and wind-state conservatives such as Rep. Steve King of Iowa and Sen. John Thune of South Dakota.
While conservatives hold wind energy hostage — an attempt to remove $1 billion in annual costs from the balance sheets — the industry’s progress thus far is being threatened entirely:
If the credit runs out on schedule, it would crater new installations and — even more important in a political atmosphere where all policy is measured in terms of employment — slice the industry’s roughly 75,000 jobs in half, according to trade group projections.
It has happened before: The PTC has expired three times since 1992, most recently in 2004, and was revived each time by Congress. 2004 saw a 77 percent drop in new installed wind power.
Elizabeth Salerno, AWEA’s data guru, says no plans exist for new wind projects in 2013.
Projects could be announced later, she said, but the time it takes to construct the massive turbines means that it’s essentially now or never — as indicated by an AWEA chart that shows the time it takes to construct and deliver the massive turbines so they can be installed by Dec. 31.
“The window of when the turbine order needs to be placed in order for it to get delivered on time for a 2013 completion is closing,” Salerno said. “If you get a PTC extension in December, the damage is done.”
While that means a drop-off in new wind power, many on the Hill are even more concerned with another implication: layoffs.
“What’s happening right now, when I meet with the PTC people, the wind people, they are already ratcheting down,” said Reichert, who is leading a House effort to save the credit. “They’ve used all their money, they’ve built all the things they can build, and now they’re starting to lay people off, preparing for no money for the rest of the year.”
The Los Angeles Times reports that 37,000 jobs are on the line and Earth Techling provides some context for the GOP vs. renewable energy paradigm debate:
New industries like solar and wind needs subsidies like the PTC to get established, allowing mass production to bring costs down. That takes decades. Republicans did nothing to prevent support for the fossil industry, which got its first support in the 19th century and which continues to this day. But Republicans and the think tanks that control them advocate wherever they can to prevent the same support for renewable energy.
Republican Senator Jerry Moran, whose home state of Kansas is a leader in wind energy technology and production, is particularly concerned with the effect delay will have on his constituents:
“While the industry waits on Congress to act, it’s damaging to the economy, it’s damaging to people who earn a living in wind, and it makes it less likely that states across the country who have renewable energy standards like mine can meet those standards over time,” Kansas Republican Sen. Jerry Moran said.
“It should have been done months ago,” Moran said. “It’s better to do it now than it would be to do it in December. It’s better to do it in December than not to do it.”