News Column

Wind Industry Works to Protect Tax Break as Fiscal Cliff Looms

Nov. 13, 2012

Sean Cockerham

wind farm

Wind energy advocates have just weeks to save a multibillion-dollar tax break, arguing half the jobs in the industry will be lost if Congress allows it to expire as scheduled at the end of the year.

But opponents are boosting their efforts to kill the tax credit as Congress resumes work this week to grapple with the nation's huge deficit problem. A group tied to the oil industry is circulating a study saying it's time for wind to stand on its own without the help.

Kansas Republican Gov. Sam Brownback told reporters Tuesday that the booming wind development in his state is headed toward zero next year without the tax break.

"That shows you how dramatic the impact is," Brownback said. "With the extension of the production tax credit there will be much more wind investment, much more wind electricity that's produced."

But markedly absent from the "Governors' Wind Energy Coalition" is Texas Gov. Rick Perry, whose state is the national leader in wind installations and home to four of the top five wind farms in the nation. Perry has called for an end to federal energy subsidies, including for oil and renewables.

The wind tax break allows power producers to lower their tax payments by 2.2 cents for each kilowatt-hour of electricity they produce in the first decade of a wind project. It can cut the costs of a project as much as a third.

Navigant Consulting has estimated that loss of the tax credit could cost 37,000 jobs. That's nearly half the wind industry jobs in the United States. The study was commissioned by the American Wind Energy Association, a trade group that has spent more than a million dollars on lobbying this year to save the tax credit.

Iowa Republican Sen. Charles Grassley is the wind industry's champion in the Senate. He said Tuesday that a one-year extension of the tax credit would cost the treasury around $4 billion or $5 billion. "The credit has been tremendously successful for renewable energy development and job creation," Grassley said.

Grassley said the fate of the tax break hinges on the deficit talks between the president and congressional leaders on the nation's looming "fiscal cliff."

"Right now all the strategy and process is on hold to see how talks between Speaker (John) Boehner and President (Barack) Obama go," he said.

Wind energy is hardly alone in getting federal help. Obama has said he wants to end $4 billion in annual tax breaks for the oil industry, and the American Petroleum Institute is launching an ad campaign trying to preserve its tax status in the deficit talks.

Conservative groups are ramping up pressure on Congress to kill the wind tax break. The American Energy Alliance commissioned a study of whether the tax credit is necessary for wind energy by Louisiana State University professor David Dismukes, saying the wind industry doesn't need a government subsidy and it's time to remove "Big Wind's training wheels."

The president of the American Energy Alliance is a former director of federal affairs for Koch Industries and was lobbyist for the National Petrochemical and Refiners Association, according to the Center for Public Integrity, a government watchdog. The group is tied to the Institute for Energy Research, which in the past has received oil industry funding.

But the wind tax break also has opponents in Congress such as Kansas Republican Rep. Mike Pompeo. He calls it an "enormous government handout" despite how big the wind industry is in his state.

Even some supporters of the wind industry talk about phasing the tax credit out over the next few years. But Grassley said getting rid of it on Dec. 31 is too soon.

"We have 20 years' investment in this. It would be terrible to throw away that investment," Grassley said.



Source: (c)2012 McClatchy Washington Bureau Distributed by Mclatchy-Tribune News Service.


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