Thursday, November 28, 2013

Could this be the end of wind subsidies?

Could Congress actually end lucrative tax credits for wind energy production? Former Oklahoma Sen. Don Nickles is optimistic that lawmakers will not extend tax credits for wind energy as pressure mounts to reform the tax code and cut spending.

“I think there is a good chance it won’t be extended,” Nickles told The Daily Caller News Foundation. “I think a lot of members are really focused on it. Members realize if you do it, it will cost billions more.”

“I think they realized the sentiment has turned, the economics have turned — big time,” said Nickles, who served as Oklahoma’s Republican Senator from 1981 to 2005 and was around when wind was first subsidized in the early 1990s.

Congressional Republicans have ramped up their campaign against the Wind Production Tax Credit, or Wind PTC, arguing that the tax credit should be cut as part comprehensive tax reform talks taken up in the House and Senate.

“As the House Ways and Means Committee takes on the commendable, but difficult, task of enacting revenue-neutral tax reform legislation, the PTC should be excluded from there or in any tax extenders legislation that the committee may consider,” reads a letter from 52 lawmakers to committee Chairman Rep. Dave Camp, who is heading up tax reform talks with Montana Democratic Sen. Max Baucus.

The wind industry and allied lawmakers have opposed ending the tax credit, arguing that it would be a huge setback for the wind industry and harm economic growth in wind-heavy states like Iowa.

Our nation has some of the best wind resources in the world, but the lack of stable policy hinders the nation’s ability to develop them fully,” reads a letter from 11 state governors to House and Senate leadership. “The nation’s wind industry developers do not need this tax credit forever, but they do need policy certainty in the near term to bring their costs to a fully competitive level.”

The Wind PTC was first enacted in 1992 and gave wind producers 1.5 cents for every kilowatt hour of electricity generated in the first ten years of operation. The subsidy has ballooned to 2.3 cents per kilowatt hour this year and the Joint Committee on Taxation estimates that extending the tax credit for another year would cost $6 billion.

“I remember when it passed in ‘92 and we were assured it was temporary,” Nickles told TheDCNF. “Since then it’s been extended seven times.”

Nickles and his fellow Republicans argue that wind energy is not reliable enough to provide baseload power, so it requires fossil fuels to back it up — eliminating the touted environmental benefits of the renewable energy source.

“Wind doesn’t blow all the time,” Nickles said. “For reliability, utilities usually have to purchase a gas-fired generator as a back-up. It blows at night when grids need the power least, it’s generating most of its power off-peak and crowding out more economical power in the process.”

Furthermore, wind producer could be facing increased legal trouble as the Obama administration has finally started to prosecute wind farms for the killing of federally protected birds and eagles.

A subsidiary of Duke Energy agreed to pay $1 million in fines for the killing of 160 birds at two wind farms in Wyoming — marking the first time the Obama administration has prosecuted wind farm operators for killing federally protected birds.

“This case represents the first criminal conviction under the Migratory Bird Treaty Act for unlawful avian takings at wind projects,” said Robert Dreher, acting assistant attorney general for the Department of Justice’s environment division.

“No form of energy generation, or human activity for that matter, is completely free of impacts and wind energy is no exception,” the American Wind Energy Association said in a statement.

“When coupled with the fact that experts globally see climate change as the single greatest threat to wildlife and their habitats, wind energy – which is produced without creating air or water pollution, greenhouse gases, use water, require mining, or drilling for or transportation of fuel, or generate hazardous waste requiring permanent storage – is a key to both meeting our nation’s energy needs and protecting wildlife in the U.S. and abroad,” the statement continued.

Wind turbines kill 573,000 birds and 888,000 bats each year in the U.S., according to an independent study published earlier this year.

“As wind energy continues to expand, there is urgent need to improve fatality monitoring methods, especially in the implementation of detection trials, which should be more realistically incorporated into routine monitoring,” writes K. Shawn Smallwood, the study’s author.


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