Carper to introduce bill extending investment tax credit
Carper’s bill would offer a 30 percent investment tax credit for the first 3,000 megawatts of new offshore wind projects, which would likely cover at least the first several projects.
Carper said he is hoping his bill can be part of a comprehensive overhaul of the tax code.
“In the end it’ll be, I suspect, part of a package, and it needs to be,” he said.
Carper introduced a similar bill in the 112th Congress with former Sen. Olympia Snowe (R-Maine), but it failed to advance.
The investment tax credit for offshore wind is set to expire at the end of the year, which means two or three projects off the shores of Massachusetts, Rhode Island or New Jersey might be able to qualify. Backers of Carper’s bill have argued that, unlike other tax credit extensions, Carper’s bill sets a limit on how many megawatts of projects qualify, meaning cost is roughly capped.
Carper, whose home state would benefit from offshore wind development in federal waters off Rehoboth Beach, has acknowledged that the Congressional Budget Office cost estimate for his bill is high, but that it is necessary to level the playing field between offshore wind and established energy sources such as oil and gas and coal.
“For offshore wind, we constructed, as you know, a tax credit that’s not going to be here forever,” he said. “It’s not permanent, but it basically says, ‘Let’s help this industry stand up, and once they’ve had a couple years to show what they could do or not, it goes away.’ I think that’s the better approach.”
The investment tax credit, which allows developers to claim a 30 percent tax credit on the cost of a project in lieu of the production tax credit, is considered more valuable for offshore wind farms and the investors who back them. Onshore projects generally claim the production tax credit, which offers 2.2 cents per kilowatt-hour produced.
Many offshore wind executives say extension of the investment tax credit is the single most important federal policy for propping up the nascent industry. While there is more than 4,000 megawatts of offshore wind in Europe, no projects have broken ground in the United States.
Environmental groups have lobbied hard for the investment tax credit, calling it critical for the industry’s continued growth.
A House version of Carper’s bill is also expected to be reintroduced today.