Tax Credit for Wind Energy Is Truly Up in the Air
With Capitol Hill focused on big-ticket items like the budget and the farm bill, lawmakers appear to have largely forgotten about the wind-production tax credit, which is set to expire at the end of this year.
Leaders of the wind-power industry say they hope legislators will come together to save the credit, known as the PTC, from disappearing, either as part of an overhaul to the tax code or a tax-extenders package. But opposition is fierce, and growing stronger, with conservative groups and oil and gas industry stakeholders lining up against any effort to rescue the subsidy.
"This is an extremely important issue to the industry and we're looking for an extension of the PTC. Right now we're in discussions with the committees around the larger issue of comprehensive tax reform," Tom Kiernan, CEO of the American Wind Energy Association, told National Journal Daily, referring to efforts by the House Ways and Means and Senate Finance committees to develop tax-reform legislation.
But the committees haven't tipped their hand, at least not yet.
Last week, Senate Finance Committee Chairman Max Baucus, D-Mont., released a series of tax-reform proposals, including a plan to end or scale back certain incentives frequently claimed by the oil industry. The plan made no mention, however, of renewable energy tax credits, including the wind production tax credit.
According to a Senate aide, it is unclear how or when a legislative fix for expiring credits could emerge. The focus right now is on a larger overhaul of the tax code, the aide said, but depending on how the debate progresses, committee members could consider dealing with extenders for next year separately. At this point, however, it's too early to tell what will happen.
On the House side, Ways and Means Committee Chairman Dave Camp, R-Mich., is also drafting a proposal but has not yet put forward a tax-reform plan. Aides to Camp did not immediately respond to a request for comment.
If the wind industry waits for an overhaul of the tax code, however, it could be waiting for a long time given that there is no certainty that legislators will be able to find enough common ground necessary to pass a comprehensive deal in the current Congress.
A second option, and one which may be more likely, would be for the credit to be renewed as part of an extenders package.
Extending the credit has become something of a ritual in Congress, with members voting to renew the tax break for wind-energy producers seven times since the subsidy was first on the books in 1992. Uncertainty over when an extension might occur is nothing new either, with the most recent extension coming in at the eleventh hour as part of a fiscal-cliff deal negotiated at the end of last year.
"If comprehensive tax reform does not go forward, yes, we would be pushing for extenders which would probably be in a somewhat standard extenders package sometime next year," Kiernan said. We'll be strongly pushing for that as soon as possible."
Efforts to extend the credit have already met with pushback from stakeholders on the other side of the issue. The American Energy Alliance, a fossil-fuel advocacy group, has so far been one of the most vocal opponents of the credit and is planning a major drive against the credit set to begin next week with the release of a series of digital and print ads in the Washington, D.C., market as well as national ads railing against the subsidy for wind producers.
AEA is also helping to organize a fly-in next week to marshal grassroots organizations from across the country to put pressure on members of Congress not to renew the subsidy.
According to Benjamin Cole, a spokesperson for AEA, the fly-in will focus on strengthening opposition to the credit among members who have already said they want to see it expire.
"You've got Senator Joe Manchin [D-W.Va.] who has signed on to ending the PTC and also in West Virginia [Democratic Rep.] Nick Rahall opposing the extension. So we're looking at some of those states where there is bipartisan congressional opposition and where the PTC presents a net loss for that state."
When asked whether he thinks the credit could be renewed, like it was this year, as part of an extenders package, Cole said he doesn't think so.
"The budget conference committee is a priority right now and that won't include an extenders package, and there's no real pressing reason to consider a separate extenders deal right now," Cole said. "The only reason Congress made a mad dash last year to get tax extenders done was that the Bush tax rates were going to expire and that would have affected almost everyone in America. This time around though we're talking about a very narrow, industry-specific tax subsidy and it's unlikely that that will be rolled into any bigger picture deal."