Tax Credit for Wind Energy Is Truly Up in the Air

COLO, IA - AUGUST 07: Wind mills are seen in a corn field on August 7, 2012 near Colo, Iowa. An exceptionally hot summer and the worst drought in more than a half century has caused cut prospects for the U.S. corn crop to a five-year low and has sent prices up to over $8.00 a bushel in late July trading. The price surge and limited supply has also prompted ethanol plants to voluntarily slow production by 20 percent, a two year low.
National Journal
Nov. 26, 2013, 1:19 p.m.

With Cap­it­ol Hill fo­cused on big-tick­et items like the budget and the farm bill, law­makers ap­pear to have largely for­got­ten about the wind-pro­duc­tion tax cred­it, which is set to ex­pire at the end of this year.

Lead­ers of the wind-power in­dustry say they hope le­gis­lat­ors will come to­geth­er to save the cred­it, known as the PTC, from dis­ap­pear­ing, either as part of an over­haul to the tax code or a tax-ex­tenders pack­age. But op­pos­i­tion is fierce, and grow­ing stronger, with con­ser­vat­ive groups and oil and gas in­dustry stake­hold­ers lin­ing up against any ef­fort to res­cue the sub­sidy.

“This is an ex­tremely im­port­ant is­sue to the in­dustry and we’re look­ing for an ex­ten­sion of the PTC. Right now we’re in dis­cus­sions with the com­mit­tees around the lar­ger is­sue of com­pre­hens­ive tax re­form,” Tom Kiernan, CEO of the Amer­ic­an Wind En­ergy As­so­ci­ation, told Na­tion­al Journ­al Daily, re­fer­ring to ef­forts by the House Ways and Means and Sen­ate Fin­ance com­mit­tees to de­vel­op tax-re­form le­gis­la­tion.

But the com­mit­tees haven’t tipped their hand, at least not yet.

Last week, Sen­ate Fin­ance Com­mit­tee Chair­man Max Baucus, D-Mont., re­leased a series of tax-re­form pro­pos­als, in­clud­ing a plan to end or scale back cer­tain in­cent­ives fre­quently claimed by the oil in­dustry. The plan made no men­tion, however, of re­new­able en­ergy tax cred­its, in­clud­ing the wind pro­duc­tion tax cred­it.

Ac­cord­ing to a Sen­ate aide, it is un­clear how or when a le­gis­lat­ive fix for ex­pir­ing cred­its could emerge. The fo­cus right now is on a lar­ger over­haul of the tax code, the aide said, but de­pend­ing on how the de­bate pro­gresses, com­mit­tee mem­bers could con­sider deal­ing with ex­tenders for next year sep­ar­ately. At this point, however, it’s too early to tell what will hap­pen.

On the House side, Ways and Means Com­mit­tee Chair­man Dave Camp, R-Mich., is also draft­ing a pro­pos­al but has not yet put for­ward a tax-re­form plan. Aides to Camp did not im­me­di­ately re­spond to a re­quest for com­ment.

If the wind in­dustry waits for an over­haul of the tax code, however, it could be wait­ing for a long time giv­en that there is no cer­tainty that le­gis­lat­ors will be able to find enough com­mon ground ne­ces­sary to pass a com­pre­hens­ive deal in the cur­rent Con­gress.

A second op­tion, and one which may be more likely, would be for the cred­it to be re­newed as part of an ex­tenders pack­age.

Ex­tend­ing the cred­it has be­come something of a ritu­al in Con­gress, with mem­bers vot­ing to re­new the tax break for wind-en­ergy pro­du­cers sev­en times since the sub­sidy was first on the books in 1992. Un­cer­tainty over when an ex­ten­sion might oc­cur is noth­ing new either, with the most re­cent ex­ten­sion com­ing in at the el­ev­enth hour as part of a fisc­al-cliff deal ne­go­ti­ated at the end of last year.

“If com­pre­hens­ive tax re­form does not go for­ward, yes, we would be push­ing for ex­tenders which would prob­ably be in a some­what stand­ard ex­tenders pack­age some­time next year,” Kiernan said. We’ll be strongly push­ing for that as soon as pos­sible.”

Ef­forts to ex­tend the cred­it have already met with push­back from stake­hold­ers on the oth­er side of the is­sue. The Amer­ic­an En­ergy Al­li­ance, a fossil-fuel ad­vocacy group, has so far been one of the most vo­cal op­pon­ents of the cred­it and is plan­ning a ma­jor drive against the cred­it set to be­gin next week with the re­lease of a series of di­git­al and print ads in the Wash­ing­ton, D.C., mar­ket as well as na­tion­al ads rail­ing against the sub­sidy for wind pro­du­cers.

AEA is also help­ing to or­gan­ize a fly-in next week to mar­shal grass­roots or­gan­iz­a­tions from across the coun­try to put pres­sure on mem­bers of Con­gress not to re­new the sub­sidy.

Ac­cord­ing to Ben­jamin Cole, a spokes­per­son for AEA, the fly-in will fo­cus on strength­en­ing op­pos­i­tion to the cred­it among mem­bers who have already said they want to see it ex­pire.

“You’ve got Sen­at­or Joe Manchin [D-W.Va.] who has signed on to end­ing the PTC and also in West Vir­gin­ia [Demo­crat­ic Rep.] Nick Ra­hall op­pos­ing the ex­ten­sion. So we’re look­ing at some of those states where there is bi­par­tis­an con­gres­sion­al op­pos­i­tion and where the PTC presents a net loss for that state.”

When asked wheth­er he thinks the cred­it could be re­newed, like it was this year, as part of an ex­tenders pack­age, Cole said he doesn’t think so.

“The budget con­fer­ence com­mit­tee is a pri­or­ity right now and that won’t in­clude an ex­tenders pack­age, and there’s no real press­ing reas­on to con­sider a sep­ar­ate ex­tenders deal right now,” Cole said. “The only reas­on Con­gress made a mad dash last year to get tax ex­tenders done was that the Bush tax rates were go­ing to ex­pire and that would have af­fected al­most every­one in Amer­ica. This time around though we’re talk­ing about a very nar­row, in­dustry-spe­cif­ic tax sub­sidy and it’s un­likely that that will be rolled in­to any big­ger pic­ture deal.”

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