In dueling economic speeches today from different corners of the key presidential battleground of Ohio, presumptive Republican nominee Mitt Romney and President Obama agreed that the road back to American prosperity will be built in large part on jobs and growth in the energy industry.
Renewable power and transportation represent the two poles of America’s power mix, the former competing with gas and coal while the latter is yoked to oil. But as the partisan rancor of even-numbered years spikes to a presidential election-fueled high, builders of wind turbines and highways are in a surprisingly similar jam. Meanwhile, clean energy advocates have continued their push for quick action to renew a key break for the wind industry that gives developers a 2.2 cent tax credit for every kilowatt-hour of electricity they generate. Previous lapses in the production tax credit (PTC), which was first established in 1992, have caused deployment of wind turbines to virtually disappear, and industry backers say the economic pain would be even more acute this year because of significant growth in U.S.-based manufacturing of turbine components.
Economists commonly favor market-based methods of curbing greenhouse gas emissions, such as taxes and emissions trading schemes, but a new survey shows that the American public does not. Rather than putting a price on carbon, Americans tend to support regulatory programs on clean energy development, industrial emission controls and vehicle mileage standards, according to the spring 2012 National Survey of American Public Opinion on Climate Change (NSAPOCC).
Senate tax writers will meet tonight to begin hashing out what temporary tax provisions are likely to be extended at year’s end, as backers of a key incentive for the wind industry step up their effort to win an extension before the election.
Bipartisan members of the Senate Finance Committee will meet in a closed-door session to discuss the more than 100 “tax extenders” that expire Dec. 31 or have already expired, including the production tax credit for wind that has been a key target of renewable energy backers. Asked about the fate of the PTC this afternoon, Finance Chairman Max Baucus (D-Mont.) said that “some have a lot more support than others” but that tonight’s session was aimed at taking a more holistic look at the expiring provisions.
Members of the Senate Finance Committee emerged from an hourlong closed-door meeting yesterday with optimism that a deal on how to handle more than 100 expiring tax provisions — including a key tax break for wind energy — could be reached this year even as they acknowledged persistent questions over how quickly agreement could be reached or what form an extenders bill would take. “It’s just a work in progress; let’s put it that way,” Sen. John Thune (R-S.D.) told reporters after the meeting. “No final decisions, just a very good discussion on a range of issues.”
A bipartisan group of 166 lawmakers are accusing Energy Secretary Steven Chu of attempting to change the role of the nation’s power marketing administrations without congressional approval. Forty senators — including Democrats Jeff Merkley of Oregon, Tom Udall of New Mexico and Maria Cantwell of Washington — and 126 House members questioned Chu’s actions in a letter last week. At issue is a March memo from Chu ordering the power marketing administrations (PMAs) to leverage partnerships, rate-making power and financing to upgrade transmission and bolster renewable power generation (E&ENews PM, March 16).
Renewable energy attracted a historic level of investment in 2011, with solar surging past wind to become the green energy technology of choice in 2011. At the same time, rapid growth and fierce competition within the renewable sector have compressed prices and led to overcapacity, driving down producers’ margins.
The four Vestas wind turbine factories located in the United States are the best argument for Congress to renew the production tax credit supporting renewable energy, said Ditlev Engel, the Danish company’s CEO. “I’m convinced that if all wind turbines were produced in Europe, the PTC wouldn’t be renewed,” Engel said in a meeting with financial analysts. “Having factories in the U.S. is a strong argument for the PTC to be renewed and save American jobs.”
Most renewable energy supporters agree that the boom-and-bust cycle created by reliance on temporary tax breaks and eleventh-hour extensions has not been an ideal arrangement, although lawmakers have been unable to agree on steadier forms of support. The wind industry is the latest to face a potential bust if its prized tax incentive disappears as scheduled at the end of this year. While congressional aides predict the incentive will win a last-minute reprieve, attention in some policymaking circles has turned to an alternative arrangement with the potential to give the industry the certainty it desires while appeasing deficit hawks and skeptics of government backing for certain energy sources: a phaseout of the credit over a set period of years.
A key tax break for the wind industry was barely discussed today at a House hearing dedicated to getting recommendations from economists on how to evaluate the merits of more than 100 expiring tax incentives. But lawmakers made clear that the fate of the incentive — and the rate at which it could be phased out — remains on their radar. Rep. Kenny Marchant (R-Texas) was the only member of the House Ways and Means Subcommittee on Select Revenue Measures to devote virtually his entire time for questions to energy-related tax incentives. He pointed to “provisions with the stated purpose of incentivizing investment in certain types of energy,” although he did not explicitly mention the wind production tax credit, which expires Dec. 31.