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August 15, 2012
Investors Urge Extension of Production Tax Credits
    by Robert Kropp

The tax credits, which help drive billions per year in private investment in the wind energy industry, are set to expire this year, which could lead to the loss of 37,000 domestic jobs.

Investors may not need absolute certainty when it comes to backing renewable energy technologies, but the least they can ask of legislators is that laws and regulations provide a little consistency.

But with many Congressional Republicans seeking to dismantle the regulatory function of government, consistency seems hard to come by. A case in point is the wind energy Production Tax Credit (PTC), which, according to the American Wind Energy Association (AWEA), "drives up to $20 billion a year of private investment into US wind farms, creating demand that allows US manufacturing to compete in a global market."

The $790 billion American Recovery and Reinvestment Act, signed into law by President Obama in early 2009, extended the PTC placed-in-service date for wind facilities to December 31, 2012.

Yet despite bipartisan support from the Senate Finance Committee for extending the tax credits beyond this year, "Renewing the tax break would likely face a tough battle in the Republican-led House of Representatives," according to Reuters. And while the Obama administration remains hopeful that the credits will be extended, Mitt Romney, the Republican Presidential candidate, wants to let them expire.

According to AWEA, 37,000 jobs will be lost by early 2013 if Congress lets the PTC expire at the end of 2012.

In a speech delivered at an Iowa wind farm, Obama said, "Unfortunately, what we thought was a bipartisan consensus in supporting wind power has been fraying a little bit during the election season. My opponent in this election says he wants to end tax credits for wind energy, wind energy producers that make all this possible. He's called these sources of energy imaginary; his new running mate has called them a fad."

In a recent Houston Chronicle column, Kristina Curtis of Green Century Capital Management and Matt Patsky of Trillium Asset Management wrote, "As investors, we look for growth stories, and wind power has been a great one. The US is generating 20 times more electricity from wind than it did in 2000, and nearly nine gigawatts - the equivalent of nine nuclear power stations - is under construction."

However, "Without certainty around the Production Tax Credit, the whole wind supply chain is threatened," the authors warned. Furthermore, they continued, "Uncertainty surrounding federal tax policy also leads to inconsistent investment cycles."

Yesterday, Vestas Wind Systems announced that it will lay off 100 of the 450 workers at its wind turbine manufacturing plant in Pueblo, CO. "Uncertainty over whether Congress will extend the Production Tax Credit is leading to a general market slowdown for wind power manufacturers and developers throughout the US," the company stated.

In The Denver Post, Colorado Senator Mark Udall wrote, "Some have questioned whether the wind PTC is necessary or if wind should be able to stand on its own two feet from the get-go. But this line of thinking does not take the long view of America's pursuit of energy independence. The wind PTC is no different from the tax incentives and benefits the federal government has given to establish the coal, oil, natural gas and other energy industries we rely on today."

According to Oil Change International (OCI), "In the United States, credible estimates of annual fossil fuel subsidies range from $10 billion to $52 billion annually, while even efforts to remove small portions of those subsidies have been defeated in Congress."


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