Investors Ask Congress for Wind Production Tax Credit Extension
By Tyler Collins
Nearly two dozen state treasurers, comptrollers, pension funds, asset managers, investment advisors, and religious advisors, with over $800 million in management, have written a letter to Congress asking for the extension of the Production Tax Credit (PTC) for renewable energy.
President George H.W. Bush first passed the PTC in 1992 as a tax credit of 2.2 cents for each kilowatt-hour of renewable power generated. This credit helps stimulate renewable energy investment and has fostered the development of domestic wind power suppliers.
Over the past five years, wind power has accounted for 35 percent of newly installed electricity generation capacity in the United States. Bolstered by the PTC, production costs for wind power are down over 90 percent since 1980.
The federal government spent $24 billion on energy subsidies in 2011, with the vast majority going to renewable energy sources, according to a report from the Congressional Budget Office (CBO). The CBO also state that renewable energy and energy efficiency accounted for $16 billion of federal funding, with almost half going to ethanol. The fossil fuel industry received $2.5 billion in tax breaks during this period.
Until 2008, most energy subsidies went to the fossil-fuel industry. However, the numbers from 2010-2011 are falsely optimistic, since over half of the funding for renewables came from the American Recovery and Reinvestment Act of 2009, which was a one-time economic stimulus package. Now that the ARRA’s energy subsidies are expiring, funding for renewable energy will be substantially cut while fossil fuels are hardly affected.
Allowing the PTC to expire would severely damage U.S. competitiveness and divert hundreds of billions of investment dollars away from the U.S. to competitors with inferior resources but stronger policies.
To date, production tax credit has catalyzed $20 billion in private investment and the creation of 75,000 renewable energy jobs (American Wind Energy Association).
“Instead of threatening tens of thousands of wind power jobs, Congress should heed these investors’ call and craft long-term policy that supports renewable energy and its workforce,” said Mindy Lubber, director of the Investor Network on Climate Risk and president of Ceres.
Ceres press release.
Full report by the U.S. Energy Information Administration of 2010 federal energy subsidies
Posted: November 7, 2012