Congress toys with the future of wind energy
Cross-posted from Climate Progress.
With every passing day, Congress outdoes its own abysmal environmental record.
Even as federal policymakers consider a transportation bill that would open up sensitive areas for offshore drilling, encourage use of dirty oil shale, force a decision on the Keystone XL tar-sands pipeline, and derail public investments in public transportation, they couldn’t even compromise on a simple short-term tax credit for wind energy.
Wind businesses were calling an extension of the credit an “emergency” due to looming mass layoffs in the industry. But as history has proven time and time again, if it’s clean and renewable, it doesn’t force any urgency in Congress.
In recent weeks, there was a strong bipartisan push to include the production tax credit (PTC) in an upcoming payroll tax cut bill. Unlike drilling tax credits for fossil fuels permanently embedded in the tax code, wind and other renewables only get short-term extensions of the PTC. With an expiration looming at the end of this year, wind companies are already reducing orders and laying off hundreds of people.
The effort to extend the PTC was supported by Republican governors, multinational corporations, and a strong coalition in Congress. However, with some congressional radicals threatening to “derail” the bill if the PTC were part of the tax cut package, the extension was not in the final bill, according to North American Windpower — effectively killing one of the only chances to revive this vital tax credit in 2012:
The news dealt a crushing blow to the American Wind Energy Association (AWEA), which had hoped that near-term legislative action connected to extending the payroll tax cut was the best vehicle to quickly pass the PTC extension.
According to AWEA, PTC action is urgent, because once the presidential campaign begins in earnest, the focus will be on campaigning, rather than on legislative matters.
Now that a near-term strategy is severely weakened, the wind industry must look to other ways that a PTC extension could be passed this year, such as in a lame-duck Congress following the November general election.
Even if the wind industry gets an extension at the last minute before it expires at the end of December, companies are still going to suffer. Projects take many years to build, and developers and financiers need clarity on whether or not the tax credit will be available when the project is placed in service. With so much uncertainty this year, they’re likely to shelve earlier-stage projects — cutting back on orders, reducing manufacturing activity, and slowing construction into 2013.
The wind industry estimates that a failure to extend the PTC will result in the loss of 37,000 American jobs. One leading manufacturer, Vestas, said it may need to lay off 1,600 people in the coming months without more policy certainty.
Meanwhile, PTC opponents in Congress continue to push for the Keystone XL pipeline, which will create a maximum of 6,000 jobs, according to the company building the project.
Last December, Sen. Lamar Alexander (R-Tenn.) and other supporters of Keystone XL in Congress nearly derailed a last-minute extension of the payroll tax cut by attempting to force a presidential decision on the controversial tar-sands pipeline. The payroll extension passed, but the tactic ultimately failed when President Obama turned down TransCanada’s permit, saying the forced decision didn’t allow enough time to properly evaluate the environmental impact of the project.
Alexander indicated that he was prepared to take more hostages during the current debate over the payroll tax cut — this time in order to prevent the wind industry from getting an extension of the PTC. In response to the tax credit proposal put forward by Democrats, Alexander railed against subsidies to wind companies:
I cannot think of anything that would derail more rapidly the consensus that is developing about extending the payroll tax cut than to do such a thing.
Indeed, there’s nothing that could derail progress in the energy sector more rapidly than hypocritical members of Congress taking a firm stance against the business of renewable energy.
Alexander failed to mention that the top five oil companies — all of which enjoy tax credits permanently embedded in the tax code — made a combined $137 billion in profits last year. And he clearly didn’t read the latest poll from Yale that found 70 percent of Americans opposed providing government support to these mature, highly profitable companies.