Wind Energy Progress Is In Jeopardy

Wind Energy Progress Is In Jeopardy

Speaking in Iowa recently, President Obama calls for extension of federal wind energy tax credit.

President Barack Obama delivered a speech in Iowa on May 24, calling for renewal of a key renewable energy tax credit. Speaking to a crowd of 500 people at TPI Composites, a wind turbine blade manufacturer that employs 700 people at Newton in central Iowa, the president called for extension of the federal wind energy production tax break that is due to expire at the end of 2012.

Wind Energy Progress Is In Jeopardy

In his 25 minute speech, the president advocated ending tax breaks to companies that ship jobs overseas. He also touted efforts to help families refinance their mortgages, a tax break for small businesses and creation of a Veterans Job Corps. But his main point was to push for the need to extend wind energy tax breaks. He said since he became president, the nation has nearly doubled its use of renewable energy, including solar and wind power.

"I'm here today because as much progress as we've made, that progress is in jeopardy," Obama said. "You can't wait for six months. You can't wait for eight months. You can't wait for a year to get this done. It's got to be done now."

President Obama makes election year plea for support for the wind industry

Obama added, "Congress should extend these tax credits, and they should do it now. Every day that Congress doesn't act, businesses grow more concerned about these tax credits drying up. They're worried demand for their products is going to fall. So they start thinking twice about expanding. They start becoming more cautious about making new investments here at home and they start looking overseas. I talked to your CEO today. He says, 'this company has an opportunity to branch out but we want to branch out by making the product here and sending it there. We don't want to branch out by sending the jobs and the investments over there. That doesn't make sense.' And I agree with that thinking."


Wind industry officials say the production tax credits have been instrumental in supporting the burgeoning wind energy sector. But with an expiration looming at year's end, the president warns up to 37,000 jobs throughout the U.S. wind industry could be lost. Officials at TPI Composites say the tax credit helped make possible their new production facility in Newton. Over the past five years, the American Wind Energy Association estimates the tax credit has encouraged $15.5 billion per year in private wind power investment in the United States.


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Unless Congress acts, the wind energy tax credit will expire at end of 2012

The Production Tax Credit, or PTC, last temporarily expired in 2005, before President George W. Bush signed a new Energy Policy Act. Bush renewed the PTC as part of that new energy package. If the PTC fails to gain traction during the current election-year congressional session, the tax incentive will expire on December 31, 2012. But industry experts warn job losses could come sooner as businesses continue to plan for their 2013 expenditures.


* What is the production tax credit?
It's a tax break for companies that use wind, solar and geothermal sources as well as dedicated energy crops to generate power. It provides a break of 2.2 cents per megawatt hour for the first 10 years of a facility's operation.


Advocates such as the Iowa Wind Energy Association say the credit has been a major driver of wind power development over the past decade. The tax credit expires for wind at the end of this year. If it is allowed to expire, that would shrink wind power expansion and jeopardize thousands of Iowa jobs, supporters say.


Critics of the tax credits, such as the conservative-leaning Heritage Foundation, say the credit costs taxpayers millions of dollars per year and that the free market, not the government, should decide which energy sources succeed. They say a 10-year extension of the production tax credit for wind energy would cost the U.S. Treasury an estimated $4.1 billion in total.


* Why wind energy is important to Iowa.
Iowa ranks first in the nation in overall wind energy jobs, employing 6,000 to 7,000 workers, including more than 3,000 manufacturing and operations jobs. Iowa ranked second in the nation in wind-generation capacity in 2011. Texas is No. 1, according to the American Wind Energy Association.

There are more than 215 wind-related businesses operating in Iowa, according to the Iowa Wind Energy Association. The industry provides more than $12.7 million in annual land lease payments to farmers and other landowners in Iowa for location of wind turbines to generate electricity. Last year Iowa generated 20% of its total electricity from wind energy, avoiding emissions that come from coal and other power sources.


All seven of Iowa congressmen favor extension of wind energy tax credit

Iowa's two U.S. Senators and its five members of the U.S. House of Representatives favor extending the tax credit. Sen. Charles Grassley, a supporter of a two-year wind energy tax credit extension, says president Obama is unnecessarily making the tax credit a campaign issue. Instead of talking up the issue in Iowa, Obama should be pushing the issue in Congress, says Grassley.


"The stakes for the wind industry and the country in general will only get worse if this tax credit renewal is delayed," says Grassley. "It's time to act, not practice politicking." Grassley, a Republican, authored and won enactment of the first wind energy production tax credit in 1992.

Steve Lockard, president of TPI, points out that the wind energy tax credit isn't stimulus money or a grant. It's an offset to tax liability only when turbines are spinning and electricity is being generated. Lockard praised Iowa congressman Steve King for calling for an extension of the tax credit in tandem with requiring the wind industry to come up with a plan for the tax credit to eventually be phased out. "I think there will be a time when wind energy can operate without the tax credit," says Lockard. "But we're not quite there yet. We urgently need this extension."

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