Ugh: Senate Democrats pushing for an eleventh-hour extension of wind’s all-important tax credit
posted at 8:51 pm on December 18, 2013 by Erika Johnsen
Why won’t you die.
Via The Hill:
In a letter sent to Senate Finance Committee Chairman Max Baucus (D-Mont.) on Monday, 25 senators urged the committee not to let tax credits expire for offshore wind investments and cleaner vehicles, among others.
“If a broader tax code overhaul cannot be achieved by year’s end, it is imperative that these key clean energy tax incentives are renewed as soon as possible,” Sen. Ed Markey (D-Mass.) said in a statement. “These tax credits have helped scale up production and drive down the cost of clean energy technologies.”
Markey added that the incentives will help consumers save on energy bills and reduce “harmful pollution.”
In a similar letter, penned by the House Sustainable Energy and Environment Coalition, six Democrats called for extensions of the clean energy tax credits.
One of the biggest arguments that the proponents of the wind production tax credit — which provides a most generous subsidy in the form of 2.3 cents per kilowatt hour of electricity produced by wind turbines — put forward is that the poor, put-upon, and entirely selfless wind industry has had to deal with so much uncertainty over the years with the continual expiration and renewal of the PTC, and we really need to give them a solid idea of where they stand once and for all (preferably, you know, with a nice, long, practically indefinite phaseout). I would one hundred percent agree with that “uncertainty” sentiment, except that I would posit that it’s actually an excellent reason to finally do away with the stubbornly regenerative monster once and for all.
The fact that the PTC’s cyclical life span is always accompanied by a boom-and-bust cycle of planning and construction in the wind industry speaks volumes about the degree to which they depend on the credit for survival. If the more than twenty years of special treatment they have received via the credit haven’t done it so far, I think we can probably say it’s time to let it go.
The industry secured a last-minute, one-year PTC holdover as part of last year’s fiscal-cliff deal, and a competing group of bipartisan senators (led by Senators Lamar Alexander, R-Tenn. and Joe Manchin, D-W.Va) is simultaneously arguing that it’s time to push wind out of the nest:
Dear Chairman Baucus and Ranking Member Hatch:
We are writing to urge you to allow the ballooning wind production tax credit (PTC) to expire at the end of 2013 as the law intends. The most recent extension of the wind PTC is actually a multi-year “phase out” that does not require the wind facility to be “in service” until January 1, 2016. This extension gave the wind industry the multi-year certainty that it had requested, so now it is time to let this technology stand on its own. …
The growth in wind is driven not by market demand, but by a federal tax subsidy that at times is more valuable than the wholesale price of the electricity in many electricity markets across the United States. Since the wind PTC is so generous, it distorts wholesale electricity markets by increasing the occurrence of the phenomenon called “negative pricing.” Negative prices encourage electricity generators to curtail generation, but the wind PTC makes it economical for a wind producer to pay the market to take their power. Conventional generation that is instrumental to the reliability of the electric grid does not have the artificial protection of the wind PTC, and is harmed by the increased occurrence of negative pricing.
As ever, all of this special treatment is hardly doing the renewable energies these Democrats claim to love any favors. Wind has been on the receiving end of this heftily generous subsidy for over two decades — hardly the way to encourage the price efficiency that could actually make these technologies viable in the long run, is it?