Over the next few weeks, Congress will decide whether to extend a key tax credit to the wind industry. The wind production tax credit—or PTC—subsidizes wind production at 2.2 cents per kilowatt hour, and without action it will expire at the end of the year.
Richard Caperton is the director of clean energy investment at the Center for American Progress. It’s a non-partisan think tank in D.C. that is advocating for the tax credit to be extended. Caperton says he doesn’t necessarily think the PTC should be around forever, but that now is not the time to revoke it.
“I think that if we want to talk about it in the context of broader tax reform next year, then that’s okay,” he said. “But right now, to single out the wind industry as the one energy industry that should see a tax increase is unreasonable.”
Caperton says the wind industry is still a fledgling industry, while fossil fuels have been getting help from the federal government for decades and still reap the bulk of federal subsidies. His organization has estimated 37,000 jobs (out of about 85,000) will be lost if the PTC expires.
Opponents of the tax credit say the federal government can’t afford it—it’s estimated to cost about 12 billion dollars over the next decade. Benjamin Cole is a spokesman for the American Energy Alliance, which opposes the extension. He says the tax credit has been a waste of money, because wind isn’t reliable and it’s necessary to have other types of energy to back it up.
“The argument was made several years ago, back in 1992, with this version of the production tax credit that we were going to help an infant industry,” he said. “Well, we’re now 20 years in, and this infant industry still seems to be stuck on the bottle and doesn’t know how to wean itself off with no real meaningful proposals coming from the wind lobbyists here in town.”
Cole says wind turbines produce the bulk of their electricity at night, when the wind blows. But that’s also when demand for electricity is lowest, and the electricity gets pushed to the grid anyway. Even if the electricity isn’t needed, wind producers still get the tax credit for producing the energy.
Subsidies for fossil fuels have been around for decades, and are written into the U.S. tax code as permanent provisions, so Congress would have to take action to revoke them. These include the foreign tax credit, the credit for production of non-conventional fuels, and a credit for oil and gas exploration and development. The Tax Policy Center (which is a project of the Brookings Institution), lists several of the benefits the fossil fuels industries enjoy, and notes the cost of eliminating either the “percentage depletion for oil and natural gas wells and hard mineral fossil fuels” or the “expensing of intangible drilling costs for oil and gas and expensing of exploration and development costs for coal” would save about as much or more over the next decade as eliminating the PTC.
Most renewable subsidies are temporary, like the wind PTC and the solar investment tax credit. A study by the Environmental Law Institute estimated that subsidies to fossil fuels totaled about $72 billion between fiscal years 2002-2008, while renewable energy got about $29 billion during the same time period.
When the House and Senate reconvene after Thanksgiving, they’ll have a little more than a month to debate the merits of extending the wind PTC.