The tax bill proposed by the U.S. House contains provisions that would threaten American job growth and energy dominance. By derailing a bipartisan agreement to phase out the wind energy Production Tax Credit (PTC), the House proposal strips away the investment certainty Congress promised wind developers just two years ago. The proposal puts at risk over $50 billion in planned investment supporting manufacturing, rural jobs, and homegrown energy growth.
“Despite comments to the contrary, this proposal reneges on the tax reform deal that was already agreed to, and would impose a retroactive tax hike on an entire industry,” said Tom Kiernan, CEO of the American Wind Energy Association (AWEA). “The House proposal would pull the rug out from under 100,000 U.S. wind workers and 500 American factories, including some of the fastest growing jobs in the country. We expect members of the House and Senate to oppose any proposal that fails to honor that commitment, and we will fight hard to see that wind energy continues to work for America.”
“The House language would have a chilling effect on private investment in U.S. infrastructure,” explained Kiernan. “No American job is safe if Congress can change the terms of business contracts years after agreements are signed and billions of dollars are spent. Private capital commitments supporting over $50 billion in manufacturing and construction activity are at serious risk under this plan. These investments were made based on the rules of the 2015 phase out. Changing the rules in the middle of the game would be disastrous for American workers building wind turbines and farmers and ranchers harvesting the wind.”
The wind industry worked with Congress in 2015, reaching a bipartisan agreement on tax reform that phased out the PTC over five years. Investors, taking Congress at their word, banked on stable investment policy and poured billions of dollars into the U.S. economy.
The wind energy PTC, which allows for a tax credit for each kilowatt-hour (kWh) generated, was the tool Congress created for wind developers to access capital needed to grow wind power in the U.S. This successful policy has driven domestic infrastructure investment and manufacturing, delivering U.S. jobs and driving down the costs to produce electricity. Recognizing the policy was working and success was near, Congress passed a bipartisan five-year extension and phase out of the credit in 2015, which is proceeding on an 80%-60%-40% schedule, ending after 2019.
The bill changes the terms of PTC qualification defining the start of construction. Investors who put billions of dollars into factory orders and construction contracts cannot go back in time to meet the revised requirements. The House tax proposal would also terminate an inflation adjustment, cutting the value of the credit by half or more.
Navigant Consulting projects that maintaining stable investment policy through the five-year PTC phase-out will create $85 billion in economic activity and help grow another 50,000 American jobs, including 8,000 jobs at U.S. factories, through the end of President Trump’s first term.
Boosting production of U.S. wind energy helps increase American energy independence and security. The majority of the value of an American wind farm is the made-in-the USA by 102,500 workers and 500 factories across all 50 states.
Filed Under: Financing, News, Policy