Don't Drink the Tea. Think With the WE.
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Jan
2013
7

Included in “Fiscal Cliff” Deal: WIND ENERGY PRODUCTION TAX CREDIT EXTENSION!



As part of the deal to avoid the “fiscal cliff,” Congress passed an extension of the Wind Energy Production Tax Credit which will allow one of the fastest growing energy sources in America to continue to thrive.

America’s 75,000 wind sector employees can finally take a collective deep breath following months of uncertainty regarding the extension. The tax credit was only renewed for one year, though, meaning the issue — much like the debt conversation to which its fate was tied — is likely to be plague by question marks in a matter of months.

For many regions in the Midwest wind energy is a lightning rod of growth. States like Iowa and Kansas often come to mind when one thinks of wind power, but Ohio businesses have used the tax credit to create a thriving industry where it seems less likely to do so.

Bill Spratley, executive director of Green Energy Ohio spoke to NBC4 in Columbus about how lawmakers have politicized wind.

“All of these industries have government subsidies and, in isolation, wind gets picked out as a football and that’s what’s so frustrating,” Spratley said. ”We’ve got to keep moving forward. This is all about the future. This is about cleaning up the environment for our children and our grandchildren.”

Traditional wind powers like Kansas want to make sure their long term investments will continue to be subsidized by the federal government until they have matured. The Topeka Capital-Journal published an editorial that discusses how the one-year extension is good for the state but will lead to another fight next year that will likely stunt growth:

A Siemens plant in Hutchinson, for instance, reduced its plant force from more than 400 employees to 150 employees through layoffs when the demand for parts it makes fell off due to uncertainty about the tax credit.

Siemens kept the plant open partially on the strength of orders for parts from Southern California and Chile, where wind farms were being built, but further development in Kansas and the vicinity now could increase demand for parts and the company’s need for workers.

Kansas has been one of the leaders in wind energy development in recent years and the money generated for landowners, construction and plant employees has been significant. The wind energy industry invested nearly $3 billion in Kansas last year. Extension of the production tax credit could spark a rejuvenation of the industry in the state and provide additional economic benefits.

Whether the tax credit will receive further reprieves is unknown. It has plenty of opponents in Congress, including some members of the Kansas delegation, and it’s likely they will continue to push for elimination of the credit.

Scott Clavenna, CEO of Greentech Media, a media and research firm focused on renewable energy, told NPR that the battle over the wind energy tax credit extension created “temporary damage” but explains that language in the extension should provide a flexibility of investment and development:

Clavenna says a small change in the tax credit means firms don’t have to finish wind farms in 2013 to get the credit; they just have to start them. So he says 2014 and 2015 are looking up.

Firms can start planning again. Since wind farms take about a year and a half to build, new ones might start coming back online in 2014. But alongside all of this up and down is a debate in Congress over whether the wind industry deserves to have a tax credit that has propped it up for two decades.

The industry, Clavenna says, sees that writing on the wall.

“Even the wind industry says we need these subsidies, but it’s OK to phase them out over six to 10 years,” he says. “It is subsidy-dependent though it’s getting really close to not being.”

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