Bipartisan Senate bill would extend production tax credit through 2014
The legislation proposed yesterday would extend for two years the wind-energy production tax credit, which provides project developers a tax deduction of 2.2 cents per kilowatt-hour. With the credit scheduled to expire Dec. 31, the wind industry has spent several months lobbying for an extension, arguing that the project pipeline will dry up if companies can’t count on the PTC being there next year.
“Tax reform efforts might modify or address this incentive in the near future, but the jobs and opportunities provided by wind energy should not be abandoned in the meantime,” said Sen. Charles Grassley (R-Iowa), the bill’s lead sponsor, in a statement.
The bill also extends for another year PTCs for biomass, geothermal, landfill gas, municipal solid waste, hydropower, and marine and hydrokinetic facilities, all of which are scheduled to expire at the end of next year. Closed-loop biomass systems are eligible for the same 2.2-cents/kWh tax credit as the wind industry; the other sectors are eligible for a 1.1-cent/kWh credit.
Renewable projects that come into service before 2015 will be eligible for the PTC if the bill becomes law.
Grassley was among senators who earlier this week voted against a broader amendment offered to the transportation bill from Sen. Debbie Stabenow (D-Mich.). That amendment, which failed in a 49-49 vote Tuesday, would have extended the PTC and a variety of other soon-to-expire energy tax incentives for another year and reinstated the controversial 1603 grant program, which allowed renewable energy developers to receive a grant in lieu of the 30 percent investment tax credit. The 2009 economic stimulus law established the 1603 program, which expired at the end of last year.
Inclusion of the 1603 reinstatement in particular drew criticism from Republicans, none of whom supported the amendment even though several have voiced support for extending the PTC.
Backers of the Grassley measure hope its bipartisan flavor and narrower focus improve its chances of passage, although its path forward remains unclear as Congress is expected to wrap up its legislative business fairly soon so members can focus on re-election campaigns.
A bill that resoundingly passed the House earlier this month — the “Jumpstart Our Business Start-Ups,” or JOBS, Act — is seen as another potential vehicle for a PTC extension. The JOBS Act is pending on the Senate floor, and senators have until 4 p.m. Monday to file first-degree amendments to the Senate version of the bill, but a final vote has yet to be scheduled, according to a notice from the office of Senate Majority Whip Dick Durbin (D-Ill.).
The other co-sponsors of the PTC extension are Sens. Scott Brown (R-Mass.), Dean Heller (R-Nev.), Mark Udall (D-Colo.), Tom Harkin (D-Iowa), Ron Wyden (D-Ore.) and Michael Bennet (D-Colo.). Brown and Heller also voted against the Stabenow amendment, while Udall, Harkin and Wyden supported it.
Grassley and his co-sponsors come from states where the wind industry has a strong presence, and supporters of the measure touted the PTC’s contribution to job creation and growth in the industry.
“With employers like Vestas willing to invest in Colorado, Congress needs to act well before the deadline and give these employers certainty to plan ahead — otherwise those jobs will move to other countries,” Udall said in a statement. “Failing to extend the production tax credit for wind energy will threaten the industry’s growth and Colorado jobs, and I’ll continue to push my colleagues for a better solution where Colorado keeps our jobs.”
The bill doesn’t include offsetting provisions to cover the costs of extending the tax credits, but in the statement Grassley said “limiting the bill’s impact on the deficit can be addressed.”