Posted: 05/25/2012 10:42 am
Director of News & Commentary, Union of Concerned Scientists
Unless Congress acts soon, the wind industry will have to trim its sails--and its workforce.
An essential federal tax break for the fledgling industry, scheduled to expire at the end of the year, has become a victim of Washington gridlock. President Obama was in Newton, Iowa, yesterday at TPI Composites, a leading wind blade manufacturer, to again ask Congress to extend the production tax credit, which provides a credit of 2.2 cents per kilowatt-hour of electricity produced by wind turbines--as well as geothermal, biomass and underwater turbines--for the first 10 years of production.
The president also urged Congress to expand a 30 percent tax credit instituted in 2009 for investments in companies manufacturing renewable energy components. The package, called the Advanced Energy Manufacturing Tax Credit, provided $2.3 billion in credits for solar panel parts, "smart" electric meters, fuel cell components and wind turbines.
Over the last decade, wind power has become one of the fastest growing energy sources around the world. According to the U.S. Energy Information Administration, in the United States alone wind generated 120 billion kilowatt hours last year, 20 times more than in 2000 and enough to light up more than 20 million households. That 32 percent average annual growth rate is due to a number of factors, mainly improved technology, state standards requiring utilities to ramp up their reliance on renewables--and the federal production tax credit.
The production tax credit, which debuted in 1992, helps level the playing field between wind and coal and natural gas and is critical for financing new projects. Although most wind power developers don't pay taxes because they're not yet turning a profit, they can raise capital by selling the credits to companies that do.
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