The Bipartisan Dash to Extend the Renewable Energy Production Tax Credit

By Margaret M. Welsh

As many are aware, the wind energy production tax credit which is set to expire at the end of this year was not extended in the payroll tax legislation as many renewable enthusiasts had hoped.  The renewable energy production tax credit was originally enacted by the Energy Policy Act of 1992 and has been extended over the years.  The production tax credit generally provides a per-kilowatt hour tax credit for electricity generated by qualified energy resources.  Qualified energy resources now include wind, closed-loop biomass, open-loop biomass, geothermal, landfill gas, municipal solid waste, some hydroelectric, and larger-scale marine and hydrokinetic power.

The credit for all the qualified energy sources listed above expires in 2013, except for wind energy which expires at the end of this year.  Currently, the wind energy production tax credit provides a 2.2 cents/kilowatt-hour tax credit for electricity generated from utility-scale wind turbines.  This credit has been instrumental in lowering the cost of electricity rates generated from wind resources in the United States.  The American Wind Energy Association (“AWEA”) reports that the credit has helped reduce electricity rates and lowered the cost of wind power by ninety percent.  Since wind energy sites take a considerable amount of time to develop and construct, there are already negative impacts of the tax credit’s impending expiration date.

AWEA is optimistic that bipartisan action can help to extend the tax credit.  Currently, there are several bipartisan actions to watch.  Last November,  House Representative Reichert (R-WA) along with Representative Blumenauer (D-OR) introduced a bill, H.R. 3307 American Renewable Energy Production Tax Credit Extension Act of 2011, proposing an extension of the tax credit until January 1, 2017 for qualified energy sources.  Currently this bill has seventy-two cosponsors and has received broad industry endorsement.

Another option to extend the production tax credit was introduced on February 15, 2012 by Senator Bennet (D-CO)  and co-sponsored by Senator Moran (R-KS) as an amendment to the Senate’s transportation bill to reauthorize federal aid for highway safety and construction programs (S. 1813).  The amendment seeks to extend only the wind energy production tax credit by one year to align with the expiration dates for the other qualified energy sources.  Further on February 24, 2012, AWEA reported that numerous U.S. Representatives and Senators signed a letter to the Leadership of the House and Senate calling for a production tax credit extension for wind energy as soon as possible.  The leaders urged that an extension is needed to provide stability for the wind industry and to help the wind industry gradually move to a market-based system.

AWEA stresses that the wind energy tax credit should be extended in the first quarter of 2012 to avoid delaying wind energy projects.  Thus, the bipartisan efforts might already be too late for a few wind energy projects, but could provide measurable stability for the other qualified renewable energy sources from either a broad-based renewable energy tax credit extension or from a lesson learned that earlier action may be needed.

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One thought on “The Bipartisan Dash to Extend the Renewable Energy Production Tax Credit

  1. Hey, until fossil fuel subsidies and tax loopholes are closed I “vote” for extending nearly all the renewable and conservation credits… and adding some new ones!

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