Wind industry, predicting job losses, pushes ‘immediate’ tax extension

Source: Evan Lehmann • E&E • Posted: Tuesday, December 13, 2011

The wind power industry is warning that it could lose thousands of jobs if Congress lets a key tax credit expire next year, amid a backdrop of disdain for green subsidies by conservative politicians.

The industry has boomed since the last time Congress let the production tax credit temporarily expire in 2003, with some 35,000 installed wind turbines now able to provide more than 40,000 megawatts of electricity. That is the equivalent of about 40 large coal-fired power plants.

The industry’s rapid pace of growth, at about 15 percent last year, is already beginning to slow down as developers question whether the credit’s payment of 2.2 cents for every kilowatt-hour will disappear in December 2012, according to industry members.

That can affect the entire supply chain, which now boasts of having more than 400 U.S. manufacturing plants, they say — because when the pace of building new wind farms decelerates, so do orders for blades, nacelles, gearboxes and thousands of other components.

“So there’s significant risk for every day, week and month that goes by without this extension,” Terry Royer, president of Winergy Drive Systems Corp., which makes turbine gearboxes in Illinois, said yesterday. “It is beginning to impact our planning for the calendar year 2012.”

Supporters are facing troubling obstacles. The credit has enjoyed bipartisan support in the past from Democrats who like its environmental attributes and Republicans who appreciate its economic boost to local businesses.

This year, some Republican presidential candidates hoping to endear themselves to tea party voters are lashing out at energy subsidies. Texas Gov. Rick Perry, whose state has perhaps benefited the most from the credit, has shifted course to support its expiration. And the Republican-led House has looked on renewable energy expenditures unfavorably.

The cloudy outlook in Congress might delay, if not prevent, an extension. It is unclear when, or if, the authors of a bill to keep the credit for four more years, Rep. Dave Reichert (R-Wash.) and Earl Blumenauer (D-Ore.), will have a chance to attach their measure to a larger tax bill.

Iowa, Texas face impacts

“I can tell you that Representative Reichert is committed to moving this legislation in any appropriate available tax vehicle before the tax credit expires,” said Charles McCray, the lawmaker’s spokesman.

The window for legislative action is smaller next year because of the presidential elections. Some lawmakers believe the first few months of 2012 could be used to pass, say, a sizable tax or energy measure. Once a Republican nominee is chosen, however, action will freeze until after the election in November.

“The planning cycle for our industry, for our product, is in excess of a year,” said Kevin Hazel, vice president of supply chain management at Siemens Energy, which employs 1,800 people in wind-related jobs. “If the PTC isn’t extended soon, the uncertainty with our customers will tend to drive them to hold back on orders until clarity is seen. That holding back will have a definite impact on the investment, growth and jobs that we’ve created in the U.S.”

The Reichert-Blumenauer bill, named the “American Renewable Energy Production Tax Credit Extension Act,” had 39 co-sponsors yesterday, including nine Republicans from states with windy resources. Some GOP supporters include Reps. Don Young of Alaska, Frank Lucas of Oklahoma, Mark Amodei of Nevada, Rick Berg of North Dakota and Tom Latham of Iowa.

“Rep. Latham strongly believes that Congress must approve an extension of the wind energy tax credit before adjourning for the year,” spokesman Fred Love said in a statement. “The tax credit’s uncertain future is freezing growth in an important sector of Iowa’s economy.”

The American Wind Energy Association released a report yesterday claiming that a failure to extend the credit would cut wind-related jobs almost in half, from 78,000 projected for next year to 41,000 in 2013. It found that investments would drop more sharply, going from $15.6 billion in 2012 to $5.5 billion in 2013.

If the credit is extended through 2016, the report says, wind-related jobs will grow to 95,000 by 2016, by which time total investments will rise to $16.3 billion.

“We’re not asking to have permanent support forever,” said Denise Bode, CEO of AWEA. “We just want to finish the job.