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October 30, 2012
With Expiration Looming, Groups Call for Extension of Production Tax Credit
    by Robert Kropp

The Investor Network on Climate Risk is the latest to write to Congressional leaders, urging them to support extending a tax credit that has helped wind energy become one of the nation's fastest growing manufacturing industries.


Wind energy has accounted for 35% of new power capacity installed in the US during the last four years, due in part to a Production Tax Credit (PTC), originally signed into law in 1992, which provides a tax credit of 2.2 cents per kilowatt-hour of renewable power. Unless Congress acts before then, the tax credit is scheduled to expire at the end of this year. President Obama supports its extension, while Republican candidate Mitt Romney does not.

But Congressional Republicans have treated the PTC like a political football in the past, allowing it to expire three times before it was renewed. Uncertainty over its renewal has led to a boom-or-bust pattern in the growth of the wind industry. "In the years following previous expirations, wind installations dropped between 73 and 93%," a recent letter to Congressional leaders pointed out. "Such short-term and inconsistent policy makes this promising sector more difficult to invest in."

The letter was signed by 23 institutional investors and investor networks with more than $800 billion in assets under management. Many of the signatories are members of the Investor Network on Climate Risk (INCR), a project of Ceres. The 100 members of INCR manage nearly $10 trillion in assets.

Despite the fact that the wind energy industry has been "one of America's fastest-growing manufacturing sectors," the letter states, "even the threat of the PTC’s expiration is already causing thousands of layoffs. In February, Vestas Wind Systems, the world's largest wind turbine manufacturer, said it would fire 1,600 U.S. workers in Colorado unless the PTC was renewed."

The American Wind Energy Association (AWEA) has estimated that the industry could lose as many as 37,000 jobs in the first quarter of 2013 alone, if the tax credit is not extended. On the other hand, Navigant Consulting has forecast that extending the PTC for four years will result in 95,000 wind-supported jobs and $16.3 billion in investment by 2016.

"Instead of threatening tens of thousands of wind power jobs, Congress should heed these investors' call and craft long-term policy that supports renewable energy and its workforce," Mindy Lubber, director of INCR and president of Ceres, said.

In September, Business for Innovative Climate and Energy Policy (BICEP), a coalition of companies also directed by Ceres, w rote to Congressional leaders, warning, "A failure to pass an extension will amount to levying a tax on companies committed to buying American energy and growing the US economy. In today's economic climate, a tax hike on American businesses buying American renewable energy is unwarranted."

Also in September, Kevin Knobloch, the President of the Union of Concerned Scientists (UCS) stated in a letter to Congressional leaders, "The Production Tax Credit has been a key driver in helping a nascent wind industry grow dramatically and create new highly skilled jobs during a deep recession and stubborn economic recovery."

According to UCS, "Short term extensions of the PTC are insufficient for sustaining the long-term growth of renewable energy…many renewable energy developers that depend on the PTC to improve a facility's cost effectiveness may hesitate to start a new project due to the uncertainty that the credit will still be available to them when the project is completed."

 

 
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