Advocates scrambling to extend subsidies for renewable energy have wind back in their sails after the re-election of President Barack Obama and Congress’ return to Washington.
The renewable energy production tax credit (PTC) gives wind power producers an income tax credit of 2.2 cents for every kilowatt-hour. Without it, wind energy can be too expensive to produce, so most new wind projects have been put on hold until companies know whether the PTC — which is set to expire at the end of the year — will be extended.
“We think we have the bipartisan support to get this done,” said Ellen Carey, spokesperson for the American Wind Energy Association. “We need to prevent the loss of 37,000 jobs, and an immediate one-year extension will do that.”
Carey said the industry has already seen layoffs in its manufacturing sector, which had been growing in the U.S. Sixty percent of a wind turbine’s value is now produced in the U.S., up from 25 percent in 2005, according to AWEA.
The industry fared well in last week’s election.
A poll released on Friday showed that energy was an important factor to voters in key swing states including Colorado, Iowa, Ohio and Virginia, and played significant a role in their presidential choice.
The poll from the American Council On Renewable Energy (ACORE) and Advanced Energy Economy Ohio Institute found that voters want to see cleaner energy encouraged in their states. Looking to the future, they’re significantly more supportive of candidates who push for shifting to cleaner energy sources (Iowa: 80 percent, Colorado: 75 percent, Virginia: 72 percent, Ohio: 70 percent). Majorities in all four states support continued government investment in clean energy (Iowa: 77 percent, Virginia: 76 percent, Ohio: 75 percent, Colorado: 72 percent) and requirements for utilities to increase use of renewables.
“It is long past time to end the vilification of an industry that is creating jobs, attracting private investment, and contributing to our economic recovery,” said Dennis McGinn, president and CEO of ACORE, in a statement. “Clean energy is a business, not a political football, and it should be treated as a business.”
In August, Republican presidential nominee Mitt Romney spoke out against renewing the PTC while he was campaigning in Iowa — a state that has thousands of jobs at stake in the wind industry, and has had bipartisan support for its renewal. The move cost him some support in Iowa, and gave Obama ammunition in his battle for the state, which the president won by about five percentage points.
“There were two very clearly different positions on clean energy and support for clean energy” during the election, said Judy Albert, executive director of Environmental Entrepreneurs (E2), a network of business leaders and an affiliate of the Natural Resources Defense Council. And while Albert said she knows voters didn’t go to the polls with clean energy as their top issue, the re-election of Obama shows they were thinking that “clean energy is important to me,” she said.
Albert said she feels more confident that the PTC may be extended now that the election is over. “It may free some Republicans to support the PTC,” she said. Those lawmakers may have felt pressured to follow in line with the party’s presidential candidate during the election.
But they will have to act fast — and damage has already been done.
“There’s wreckage on the tracks,” Albert said. “There are so many projects that have been put on hold because they didn’t know if the extension would go through, it’s going to take a while to gear the things back up again” if it does. A report issued last week by E2 found that there were zero wind industry manufacturing job announcements in the third quarter, compared with eight announcements in the first and second quarters of the year.
The PTC has been allowed to expire in the past, and in the years that followed, wind installations dropped between 73 and 93 percent, according to AWEA.
The lame-duck Congress, which returned to Washington on Tuesday, is more focused on the fiscal cliff the country faces at the end of the year. But the PTC may end up as a one-year extension along with several other tax credits in fiscal cliff legislation. That would help, but only short-term — the industry would be in the same position a year from now.
Still, the temporary fix would give the subsidy to any projects where construction has started by the end of 2013.
“Every day that Congress delays action means more layoffs and job losses for American workers,” Sierra Club President Michael Brune said in a statement. “The wind industry doesn’t just support clean energy that keeps our air free of pollution, it also feeds the families of 75,000 workers.”
Critics, such as the American Energy Alliance, argue that the credit gives “training wheels” to an industry that doesn’t need them, reported The Hill. The AEA, along with other conservative groups and lawmakers, have tried to tie the 20-year-old incentive to failed renewable energy companies like the bankrupt Solyndra, and say the government can’t afford to give handouts while the country is in an economic crisis, reported Politico.
“We’ve always said we won’t need the tax credit forever,” AWEA’s Carey said. “Right now we’ve got to do the job of extending it to prevent job loss and let us create new manufacturing.”
A bipartisan group including Iowa’s Republican Gov. Terry Branstad and Sen. Chuck Grassley, and Republican Gov. Sam Brownback of Kansas held an event on Capitol Hill Tuesday to push for an extension of the PTC along with Democratic governors John Hickenlooper of Colorado and John Kitzhaber of Oregon.
“Thousands of jobs in the wind industry have already been impacted by the credit’s looming expiration and thousands more are at risk,” the Governors’ Wind Energy Coalition, representing the governors of 28 states, wrote to Congressional leadership. “We urge you to take swift action to extend the PTC before the end of this congressional session.”
“What I’m seeing in this state alone, [is that] we are having a massive investment this year in wind energy — about $3 billion in new wind investment, nearly 1,400 megawatts,” Kansas Gov. Brownback said by phone at a press conference on Tuesday.
“Everybody wants to deal with the financial problems we have as a country,” he said. “The key to ending our fiscal problems is to grow the economy, and this helps grow the economy.”
And with the arrival of the holiday season, there aren’t many working weeks left for Congress this year. The lawmakers said they were waiting to see where the fiscal cliff talks between House Speaker John Boehner and President Obama lead.