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Will Congress Extend the Renewable Energy Tax Credit?
Three years ago I would have never believed that in December 2011 our country would still be running without a federal energy policy. It has been clear for so long that we need to transition to cleaner, renewable sources of power and pass legislation mandating a renewable portfolio standard (RPS)—requiring a certain percentage of the nation's electricity to be generated by renewable energy sources—and put a cap on carbon.
Years ago it seemed inevitable that we would finally move in the right direction and create a sustainable energy system. But we find ourselves in the same position as we did this time last year, without a RPS or carbon tax, and hoping Congress will extend the renewable energy production tax credit (PTC) before it sunsets at the end of the year. The PTC allows companies who invest in renewable energy to receive a grant in lieu of a tax credit. The grant is highly desirable for companies that don’t have taxable income to offset the tax incentive.
The PTC extension is necessary to help level the playing field between the fossil fuel industry and renewables. Since the fossil fuel industry is so highly subsidized by the federal government, and externalizes its costs, it is impossible for solar, wind and other renewable industries to compete without incentives. According to a report—60 Years of Energy Incentives—by the Management Information Services (as summarized in the chart below), shows that the largest beneficiaries of federal energy incentives have been oil and gas producers, receiving more than half of all incentives provided since 1950. The fossil fuel industry as a whole, has received more than 70 percent of all incentives throughout the last 60 years.
If the PTC extension is not renewed, it will greatly reduce the number of renewable energy projects installed in the U.S. and put us further behind other nations in the manufacturing of renewable energy technologies and commitment to reducing carbon emissions.
According to the American Wind Energy Association (AWEA), facing the threat of the PTC expiring, wind project developers are hesitant to plan future U.S. projects and American manufacturers have seen a marked decrease in orders. Job layoffs have already begun. The wind industry is facing the recurrence of the boom-bust cycle it saw in previous years when the PTC was allowed to expire. In the years following expiration, the number of annual installations of wind projects dropped by more than 70 percent, resulting in significant job losses.
AWEA points out that the wind energy industry has lowered the cost of wind power by more than 90 percent, has fostered economic development in all 50 states and currently powers the equivalent of 10 million American homes. The PTC has been instrumental in helping the wind industry achieve these breakthroughs. Experts say that if we keep the PTC in place, more than 500,000 jobs will be created in the next 20 years. By then, wind will generate 20 percent of America’s electricity.
In the House of Representatives, Congressmen Dave Reichert (R-WA) and Earl Blumenauer (D-OR) have introduced HR 3307, the American Renewable Energy Production Tax Credit Extension Act of 2011. This bill proposes to extend the PTC for four years.
In the Senate, legislators are discussing tax legislation that's expected to be passed before the end of the year. Renewable energy advocates are encouraging Senators to include the PTC extension in this tax package.
Now is the time to urge Congress to take immediate action to pass a four-year extension on the PTC. You can send an email to your elected officials by clicking here.
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