Coalition to Congress: End the Wind Production Tax Credit Now

23 groups including well known names like Koch-Brother’s backed Americans for Prosperity, FreedomWorks and Club for Growth sent a letter to Congress, calling for an end to the wind production tax credit (PTC), which expires once again at the end of this year.

This "misguided handout" must end, says the letter. They are against a phase-out of the credit too, which the wind industry has suggested.

They sent a similar letter before the PTC expired last year, calling for it not to be renewed. It was countered by 19 leading businesses whose letter expressed strong support for renewing the PTC. 

The letter doesn’t mention ending handouts for fossil fuels, which has been voted down in the Senate. As the Green Scissors campaign points out, oil, coal, gas and nuclear industries receive over three-quarters of energy subsidies and allowances, about $300 billion a year. 

Coal, for example, received over $25 billion for production, transport, use, or waste disposal from 2002-2010; $16 billion of that for tax benefits, according to Environmental Law Institute. The biggest category is the nonconventional fuels tax credit, providing $12.22 billion. 

Here is the letter:

September 24, 2013

Dear Senators and Representatives:

On behalf of the millions of members that our organizations represent, we encourage you to oppose extending the main source of federal support for wind energy, the production tax credit (PTC). The problems with bestowing government favors on wind energy are myriad – it doesn’t produce cheaper energy, it threatens electrical grid reliability, it’s inefficient, it’s unprincipled tax policy, to name a few – and it’s time to end this misguided handout.

Proposals to phase out the credit over time are a red herring. A phaseout is still an extension, and it does not address any of the problems that arise from government backing for wind energy. Besides, the PTC in its current form already has a phaseout built in: Wind farm projects may claim the tax credit for 10 years following receiving an investment letter.

In addition, we discourage you from including a PTC extension in a large tax extenders package at the end of the year. This is precisely what happened this past December; a 1-year PTC extension and expansion found its way into the Fiscal Cliff deal at the last minute. This provision expanded wind farm eligibility from those that were already in operation to those that were simply in the planning stages. If Congress is serious about comprehensive tax reform that lowers rates for everyone, then special provisions like the PTC that clutter the tax code should be first on the chopping block.

The PTC is scheduled expire on December 31, 2013. Congress should ensure that it does so as to clear the way for a simpler, less burdensome tax system across the board.

Sincerely,

James Valvo, Director of Policy, Americans for Prosperity
Phil Kerpen, President, American Commitment
Al Cardenas, Chairman, American Conservative Union
Thomas J. Pyle, President, American Energy Alliance
Terry Scanlon, President, Capital Research Center
Tom Brinkman Jr., Chairman, Coalition Opposed to Additional Spending and Taxes
Marlo Lewis, Senior Fellow, Competitive Enterprise Institute
Thomas A. Schatz, President, Council for Citizens Against Government Waste
Myron Ebell, President, Freedom Action
Wayne T. Brough, Ph.D., Chief Economist; VP for Research
FreedomWorks
George Landrith, President, Frontiers of Freedom
Michael A. Needham, CEO, Heritage Action For America
Sabrina Schaeffer, Executive Director, Independent Women’s Forum
Seton Motley, President, Less Government
Colin A. Hanna, President, Let Freedom Ring
Amy Ridenour, Chair, National Center for Public Policy Research
Pete Sepp, Executive Vice President, National Taxpayers Union
Andrew Moylan, Outreach Director & Senior Fellow, R Street Institute
James L. Martin, Chair, 60 Plus Association
Joshua Sewell, Senior Policy Analyst, Taxpayers for Common Sense  
David Williams, President, Taxpayers Protection Alliance
Chris Chocola, President, The Club for Growth
Daniel Garza, Executive Director, The LIBRE Initiative
Morton Blackwell, Chairman, The Weyrich Lunch

The Other Point of View 

Rep. Mike Fitzpatrick (R-PA) introduced a bill to extend the PTC before the August recess. "The PTC Certainty and Phase-Out Act of 2013" (HR 2987) would extend the tax credit for another six years and then phase it out for good. 

"This bill gives wind energy producers a six year window to make this alternative form of energy work on market-based principles," says Fitzpatrick. "Half a century ago, we put a man on the moon in under a decade; this bill will provide a stable window for today’s wind energy entrepreneurs to make this technology work affordably.  This bill positions them for achieving success." It gives the certainty the wind industry need, he says.

To level the playing field with conventional energy, Obama’s Science Advisors recommend broadening the tax credit for wind to include all forms of renewable energy and replacing the annual renewal with a longer time horizon of 5-10 years.

Ernst & Young ranks the US after China as the most attractive country for renewable energy investment because of uncertainty over the future of the PTC and because of the increasingly fossil fuel-oriented political landscape.

As of early 2013, there are 60 gigawatts of wind capacity in the US, enough to supply 6% of electricity.

There were lots of layoffs in advance of the expiring credit and since being renewed, the industry is taking off again. But wind installations are at the lowest levels in years in 2013 because the credit was renewed at the last minute.