Is Wind Industry Running Out Of Breath?

Iowa Farm Scene

Iowa officials are pushing hard for extension of federal tax credit for production of wind energy

Published on: November 13, 2012

Uncertainty over the future of the wind energy tax credit has already cost Iowa hundreds of jobs. Supporters of the subsidy say many more jobs could be lost if Congress doesn't vote to extend the controversial measure which expires at the end of 2012. The wind industry has been promoted by states such as Iowa as a way to create jobs, reduce the nation's dependence on foreign energy and to promote investment in clean, renewable energy.

Iowa Gov. Terry Branstad and Iowa U.S. Sen. Chuck Grassley were participants in a press conference with other wind energy supporters in Washington, D.C. on November 13 to generate support to try to get Congress to extend the tax credit. Branstad is chairman of the U.S. Governors' Wind Energy Coalition. He and Grassley were joined by officials from other "wind energy" states at the press conference.

WIND FARMS: The wind industry employs about 7,000 people in Iowa, as the state has several factories that make wind turbines and related parts. Also, Iowa ranks second to Texas for installed wind generating capacity. About 20% of Iowas electricity is now generated by wind. Over the past 20 years nearly 3,000 wind turbines have been erected on more than 100 wind farms statewide.
WIND FARMS: The wind industry employs about 7,000 people in Iowa, as the state has several factories that make wind turbines and related parts. Also, Iowa ranks second to Texas for installed wind generating capacity. About 20% of Iowa's electricity is now generated by wind. Over the past 20 years nearly 3,000 wind turbines have been erected on more than 100 wind farms statewide.

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The Production Tax Credit is scheduled to expire December 31, 2012. Supporters of the credit are warning that allowing it to expire will hurt the wind industry and local economies that benefit from the wind industry. With only six weeks left before the credit end and Congress facing a full workload of other pressing matters such as the federal budget fiscal-cliff and a number of tax issues, an extension of the wind tax credit is very unsure.

Tax credit for wind energy has given Iowa economy a good lift
The American Wind Energy Association has warned that if Congress doesn't renew the tax break, that failure could result in the loss of 37,000 jobs in the U.S. The tax credit, which has had bipartisan support throughout its 20 year history, provides a subsidy of 2.2 cents per kilowatt hour to the wind industry. The tax break goes to the producers of electricity from wind. They are the ones who buy the turbines and build the wind farms and lease the sites from farmers where the wind farms are located. The wind farms pay local property taxes, too, helping support schools and providing funds for other local needs.

The tax credit has been a big help for Iowa's economy, says Branstad. The state, which now generates about 20% of its power from wind, has wind turbine and blade manufacturing plants at Fort Madison, West Branch, Cedar Rapids and Newton that employ thousands of workers.

Opponents of the tax break say it is a waste of money. The American Energy Alliance (a lobby group funded by the coal industry) says the wind industry is strong enough to stand on its own and doesn't need government support. The alliance says the tax credit was created in 1992 to help the wind industry get established. "Yet 20 years later, there is little to show for it," says a press release issued by the alliance. "The U.S. government is still providing a $5 billion special tax break for an industry that supplies only 2% of our nation's power."

~~~PAGE_BREAK_HERE~~~Countering that argument, Branstad and Grassley pointed out that the wind energy tax credit is very small compared to the huge tax breaks and government subsidies the coal and nuclear industries receive and have received for many, many years. Coal and nuclear, as industries that are well-established for generating electrical power in the U.S., have received various subsidies and tax breaks for a lot longer period of time.

There is bipartisan support for extending the production tax credit for wind energy
The group of wind energy supporters who spoke via the press conference in Washington on November 13 was a bipartisan group of four governors and a U.S. senator. They urged Congress to extend the production tax credit for wind energy, one of a number of tax incentives scheduled to expire at the end of the year. Gov. Terry Branstad, R-Iowa, joined Sen. Chuck Grassley, R-Iowa, on Capitol Hill for that news conference which Govs. John Kitzhaber, D-Ore., Sam Brownback, R-Kansas and John Hickenlooper, D-Colo. joined by conference call.

These five government leaders, all boosters of renewable energy, expressed optimism that Congress will approve an extension of the production tax credit for wind energy during the lame duck session that began last week. "As governors, we want to add perspective on the importance of extending the production tax credit," Branstad said. "My state has already directly seen the negative impact related to the production tax credit not being extended earlier by Congress. For example, the Siemens Company recently laid off over 400 employees at its plant in Fort Madison, Iowa, and Clipper Wind Power laid off 100 workers at its plant in Cedar Rapids, Iowa."

Biodiesel industry was crippled when Congress let that tax credit lapse
Grassley said the uncertainty about the future of this tax incentive and others "hurts the economic good these policies do, and Washington should have learned the lesson given by biodiesel when its tax credit was allowed to lapse two years ago. In addition to jobs being lost, an important source of domestic, renewable energy was hurt. The wind-energy production tax credit is designed to level the playing field against coal-fired and nuclear electricity generation. This tax credit has been tremendously successful for renewable energy development and job creation."

Kitzhaber said, "We need to invest in domestic energy sources that not only meet our energy needs, but create healthier communities. We need to invest in energy resources that are clean and renewable, and affordable. Few policies offer a better return on investment for our country than the wind energy production tax credit. Nationally, the wind energy industry now drives $10 billion to $20 billion per year in private sector capital investment and employs 75,000 Americans. These are jobs created right here in our own backyards that cannot be outsourced.

Iowa's Grassley was an original author of the wind energy tax credit
Branstad is chairman and Kitzhaber is vice chairman of the Governors' Wind Energy Coalition. Brownback and Hickenlooper are members of the coalition.

Grassley first authored the production tax credit for wind energy in 1992. He has worked to extend it over the years and secured a one-year extension in legislation adopted in August by the Senate Finance Committee. Grassley said no single energy tax incentive should be singled out over others before a broad-based tax reform debate takes place.