By: John Mangalonzo |
The lingering question of whether Congress will allow the federal wind-energy Production Tax Credit to expire at the end of the year or vote to extend it is raising the anxiety level among those in the industry.
Texas leads the nation in wind energy, which generated about 8.5 percent of the state’s electricity last year, employing about 9,000 people.
Many other businesses benefit, too, including truckers, hotels, restaurants and hardware stores.
And on a larger scale, 60 percent of a wind turbine’s value is now produced in the United States, up from 25 percent in 2005.
The Production Tax Credit provides an income tax credit of 2.2 cents per kilowatt-hour for the production of electricity from utility-scale wind turbines. The industry relies on the credit to keep wind energy cost-competitive with fossil fuels while the companies grow, technology improves and wind gains a foothold in electricity production.
The tax credit amounts to about $1 billion. In the past five years, the industry brought in as much as $20 billion in private investment to the U.S. According to the Congressional Research Service, the wind energy tax credit cost taxpayers $1.6 billion this year.
If the tax credit expires Dec. 31, the industry will still have the support for 10 years. Companies are eligible to claim the credit for 10 years after project completion, meaning previously constructed wind turbines will continue to receive the subsidy.
Those involved locally in the wind industry question the rationale behind some Texas congressmen’s opposition to the tax credit. Some Republicans, who have expressed concern about the industry being a major economic driver in the region, noted they will champion a gradual phaseout of the credit as opposed to an immediate cutoff.
AN INDUSTRY CAUGHT IN THE MIDDLE
Uncertainty over whether Congress will renew the tax credit has led some companies to lay off employees. Siemens and Vestas, the world’s largest turbine manufacturer, with operations in Colorado and Texas, recently laid off 1,400 workers globally on top of 2,300 layoffs announced earlier this year.
“It will stall progress” if the credit is not extended, said Jay Martin, a project engineer for Signal Energy. “It would be a stumbling block for the industry. It wouldn’t stop it completely; it would lag it.”
The disagreement seems to have become so political that the industry is caught in the middle, Martin said.
“I wish our members of Congress, who allegedly were elected in Texas, would work for Texas,” said Greg Wortham, executive director of the Texas Wind Energy Clearinghouse information exchange. “I can walk and chew gum at the same time: I’m for oil, I’m for nuclear and for natural gas, I’m for the cleanest coal plants in the world, and I’m for wind and solar, and the people we elected can’t seem to do that.”
Wortham said the first phase of the aftermath of a nonextension has already begun.
“The turbines are staying, the wind service jobs are staying, but people all over the United States, including Texas, tens of thousands of other (wind energy-related) jobs are being lost,” Wortham said. “Everyone who manufactures something; everyone who transports something and anybody who constructs something are subject to 100 percent layoff.”
At its peak in 2008 and ’09, the wind industry employed about 85,000 people, according to the American Wind Energy Association, the industry’s principal trade group.
A recent report by Naviant Consulting indicated 37,000 jobs will be lost and private investment in the industry will drop nearly two-thirds should Congress allow the credit to expire. The job losses will accelerate with each month the credit nears the expiration date.
Wortham speculates opposition from Republican lawmakers is mainly a polarity issue: “The president is for it, so they are against it.
“Legislators should see that the wind energy industry is creating new schools, it’s creating double-income jobs, and it has created a whole new sector in the region,” Wortham continued. “It’s just irresponsible.”
Wortham said he has met with Texas lawmakers, and he has repeatedly raised the issue. He noted “it’s pointless” because “the best that (U.S. Rep.) Randy Neugebauer could come up with was he was undecided about wind energy.”
“He has always been against it,” Wortham said. “You can’t be in this region and be a public official and be against this.”
LAWMAKERS EXPLAIN POSITIONS
Neugebauer says he is still studying the different proposals.
“Wind energy is a major economic driver in West Texas, and I support an all-of-the-above energy strategy that promises job creation, boosts our economy and ensure access to affordable American-made energy,” said Neugebauer, a Republican whose district include Abilene.
However, Neugebauer noted, “It’s not yet clear what final package of tax extenders we will vote on, so I’m still reviewing all the information about the many different proposals to extend the wind production tax credit.
“My goal is to reduce regulation on all energy resources, and to make sure we don’t pick winners and losers in the market.”
Neugebauer has not firmly said he is against extending the tax credit and has only voted against permanent extensions. According to House records, the congressman has supported short-term extensions in the past.
This time around, Neugebauer said, he will look at the proposals and act on its individual merits.
Rep. Mike Conaway, a Republican whose district includes Sweetwater, San Angelo and Brownwood, said he favors a gradual reduction as opposed to a cutoff.
“As representative of one of the most prolific wind energy producing districts in the nation and as the representative of thousands of families whose lives are directly tied to wind manufacturing, I understand how important the Production Tax Credit was to developing and expanding this industry,” Conaway said. “I do not favor an immediate repeal of the PTC, but rather a planned gradual phaseout of the credit that would provide current employees, manufacturers and developers with a road map for the future and long-term certainty they can count on.”
U.S. Sen. John Cornyn, R-Texas, voted in the Senate Finance Committee in August against a bill containing a one-year extension. However, he said he would back a one-year extension if the tax benefits were reduced by 20 percent.
The committee has approved the one-year extension by a 19-5 vote, but it has not come up for a vote on the Senate floor.
But as December draws closer, patience is running thin in the industry.
“If our (lawmakers) who live in this district, who travel in this district, who pretend to talk to people in this district can’t see the value of this and don’t have the guts to tell Washington what to do instead of listening to Washington, then there is no point in doing anything,” Wortham said. “If they can’t figure that out, we can’t convince them.”