A production tax credit (PTC) that lasts six years? That’s what Pennsylvania Congressman Mike Fitzpatrick proposed to Congress in late summer with his Production Tax Credit Certainty and Phase-Out Act of 2013. Six years gives the wind industry time to more fully develop so a PTC-phase out would not stunt growth, as has been the case in the past. The six-year period would also strengthen the market, allowing wind to compete with other energy sources. One-year extensions have weakened the wind industry because it generates too much uncertainty.
About 60 U.S. Representatives also want to weigh in on the subject and so signed a letter to the House Committee on Ways and Means to promote renewable energy tax reform. The letter highlights that renewable energy investments have increased worldwide, but declined 34% in the U.S. due to policy uncertainty. This investment inconsistency in American-made energy not only negatively affects the economy, but American consumers as well.
The wind industry has received fewer incentives than other energy sources, such as fossil fuels, which enjoy permanent tax credits. These credits can make an energy source profitable to investors because of the high likelihood the industry will be stable.
The PTC has been the wind industry’s primary incentive, and an effective one. In 2012, for instance, it sparked over $25 billion in private investment that set a new installation record. Sadly, the industry saw no growth in the first half of 2013 due to the delayed PTC renewal. The wind industry doesn’t need life-long incentives to be sustainable. It just needs the same support fossils fuels and nuclear have received…for a more limited period.
So, what is the likelihood of passing the Production Tax Credit Certainty and Phase-Out Act of 2013? I’m not sure with so much opposition to renewable and sustainable energy sources. But what I do know is that the wind industry supports about 80,000 jobs in the U.S. and is less polluting than most traditional energies. What’s more, wind is becoming increasingly affordable, making it a good buy for electric utilities. And we all reap its benefits. Also, improvements throughout the industry provide increased turbine reliability, which further alleviates price fluctuations that have occurred in other energy sources, such as natural gas.
Keeping an archaic energy mentality and not embracing inevitable change is hurting our economy. Wind energy is a well-tested, sustainable energy source throughout the world. Overall, I believe wind energy will find a way to grow and thrive with or with out a PTC, but a little incentive never hurt.
Windpower Engineering & Development
Filed Under: Featured, Policy