Will Congress Let the Wind Power Tax Credit Die?

Congress remains sharply divided over decisions to extend the wind power production tax credit (PTC). Set to expire on December 31, the PTC currently grants wind power producers a tax credit of 2.2 cents/kilowatt-hour, in addition to a federal wind power investment tax credit. Last week Sen. Chuck Grassley (R-Iowa) released a video urging Congress to extend the benefit contending that "it should be part of the effort in Washington here to get more Americans working."

Grassley argues that without the PTC extension wind power would be the only energy source not subsidized by the federal government. American Energy Alliance president Thomas J. Pyle, speaking to The Daily Caller, replied to Grassley's concerns "Senator Grassley complains that ending the PTC will mean that wind energy is the only source not receiving government support. That sounds like a good start to us." This reiterates the Alliance's letter to Congress urging them to scrap the PTC in which they argue "American consumers-not Washington lawmakers- should decide the future of American energy"

David Kreutzer, writing on The Heritage Foundation's blog, agrees. The tax credit has "created an industry that produced overpriced, intermittent power," he says, which will "continue to produce overpriced, intermittent power so long as there is a PTC to pay for it." Kreutzer points to European examples of wind subsidy failures, including Spain, which dropped subsidies as soon as the economy began to nosedive, and Germany, which recently reduced subsidy commitments as a result of spiraling costs and unreliable energy outputs.

Extending the PTC subsidies for just one year would cost the federal government $12.1 billion, according to the Joint Committee on Taxation. Without the extension the Energy Information Administration estimates that wind generation will still increase 50 percent between 2012 and 2035. Standard & Poor also estimate that over $150 billion will be invested into renewable energy opportunities- largely wind-based- regardless of whether the PTC is extended.